Capital – Investment, Debt, Employment to Market Equilibrium before and in the 21st Century


market* - equals – economic, economy, macroeconomic marketplace

demand^ – equals – income, macroeconomic demand

market development** – equals – economic growth

In the currently used Economics, the employment is still considered as a market consequence to a natural investment of capital with rising productivity, whereas tight monetary supply keeps a “hungry” pool of unemployed making them under pressure to comply with the market* driven supply-to-demand labor and otherwise market*, therefore, a full employment was considered as counter-productive for the market* growth to be maintained, moreover, the inflationary forces of an over-demand would be sustained. The Economics of Scarce Resources of anytime before the 21st Century with relatively less developed technologies, limited globalization, political divisions, etc (the rest of the points will be given in later) had worked in proper for such successful Capitalism by the markets* of US, some EU countries, UK, and Japan.

Then the most developed markets* had used their mostly manufacturing capabilities empowered by the best at its time technologies and well developed labor market to dominate on a less developed, struggling to improve global market*.

However, the 21st Century has brought a few market developments that are new by nature to affect the real economy: developing and undeveloped markets* by tipping off the supply-to-demand market pressure into a demand-to-supply such.

 

  • Ongoing Globalization – sharply expanded by the end of the cold war.
  • Rising Productivity: accelerated by the Internet.
  • China’s Industrialization and WTO membership.
  • Transnational Corporations’ Moving and Outsourcing of Industrial Production from the Developed Countries.
  • Capital FDI mostly through the Transnational Corporations.

 

The 21st Century came with very high productivity and large pool of capital to a globalized market* taken literally by the Transnationals for a ride; with the exception of China, which well run market* policies boosted its internal market demand^ to properly capitalize on its long-run trade surplus: Stimulus packages into Infrastructure and targeted less-developed (internal) markets*, Fiscal breaks to targeted market* sectors and less developed areas, to SME (Small and Medium Enterprises), the usage of State-owned Enterprises to lower unemployment and raise salaries; or of Germany, which highly-competitive export oriented manufacturing kept it afloat in times of the 2007+ Recession and Post-Recession times to not accumulate excessive National Debt; or of a few markets* such as some of the OPEC countries and Norway e.g. The rest of the world has gone through the deepest 2007+ Recession followed by slow Post-recovery, increasing inequality and national debt, declining middle class, high unemployment, and most important: the over all lack of vivid market development** that could be improving the global market in environmentally friendly ways to provide to the majority a sustained probable access to employment and the related goods and services. The austerity measure that followed the ongoing theory in economics are pro-cyclical by nature, the trickle-down philosophy of lower taxation, the subsidies particularly in the EU: all prompted inequality lowered the market demand and established conditions of market imbalance that policies resulted in their worst in the most of the EU markets* slum, indeed. Casual of high unemployment, deficit, longer-term recession. What the US, UK and Japan did through Quantitative Easing, Stimulus Packages, Fiscal measures generally counter-cyclical measures have been avoided by the EU, and therefore, it could be said with certainty that these market* policies have helped these markets* to keep however sluggish market development** following the 2007-9 Recessions (the 2009 is added to these markets* performance while the EU is not included). With certainty the more active policies with a consistent long term the better performance e.g. China tops them all with very proactive and consistent market policies, Japan follows with the Abenomocs in action whereas the PM Abe holds firm powers, the US and UK follow less successful casual of using unorthodox methods more-like preventive as post-recession ones, than proactive “as it come; as it goes” market* policies, then finally it comes the EU with the most rigid orthodox market* policies based on deficit reduction and austerity measures that resulted in prolonged recession up to the end of 2013, high unemployment and slow recovery. Most of this information is supported by reliable data sources by “The (not so) Unconventional Monetary Policy of the European Central Bank since 2008″ | Read more at Bruegel http://www.bruegel.org/publications/publication-detail/publication/837-the-not-so-unconventional-monetary-policy-of-the-european-central-bank-since-2008/.

The utilization on the conclusions made by the previous section of this article clearly shows that pro-active market* policies by a government or governments brings better results to more consistent Market Development, whereas inactive policies, or ones based on the orthodox economics prolongs recessions and slow recoveries. However, contrary to this conclusion: in different levels all governments lack business sense and flexibility to manage economics, whereas populism and ideological polarization, mostly in the plural democracies, add substantially to the governments’ inconsistency in their market* policies, and it could be stated with surety that governments could be blamed for their offhand deregulation policies particularly in the financial sector that prompted the 2007 Recession; therefore, to rely just on the governmental market* intervention will be incoherent.

Second, the governments are not proficient enough to maintain adequate market* activities with low unemployment and underemployment, thus bringing fiscal shortages and rising social expenses and inequality.

The success of the most developed markets with the exception of EU to wrestle the 2007-9 Recession is real, but it was necessary because the system of economics well supported by the governments themselves was not proficient enough to do not allow it happening in the first place? The possible prevention was not activated whereas the needed reforms were not implemented on time.

The expectations of a shorter and milder market correction managed by the self-adjusting cyclical powers of the Capitalism did not work it out?

Therefore, when leveraging the positive to the negative effect of the governmental involvement: it appears the governments’ intervention was necessary, and when for the future: if the system of economics does not succeed to prompt enough business activities the governments will be the only saviors by using total market interventions?

What the Capitalism misses under the ongoing globalization and rising productivity to manage market equilibrium is the ability to properly use market tools to steer enough business activity matching the needed demand; unless in long human history, when the supply was the ruling market element alone with always boiling inflation; however, under the new conditions, the demand alone with ever pushing deflation is that issue. Therefore, deficit and national debt alone with inequality are on a rise, the globalization has had allowed large transnational corporation to access inexpensive labor-pool, low taxation, lack of consumer and environmental protection…. for the few large transnational corporations and large investors under such conditions the system has performed well, but for the many it has not had at all: declining middle class, high personal debt, unemployment and underemployment….., expanding governmental market intervention to prevent from total collapse in the recession time, and in attempts to boost growth in post recession time.

What distinguished China as the best performing market of the all developed ones has been the combination of social distribution well inherited in Socialists’ ideologies, combined with active market policies, however, even the Chinese policies and performance has been and still are the best, under the conditions of the very developed US, UK, EU and Japan on a global scale if their system of economics is enhanced by using more proficiently the variable market tools the results could be very advancing, indeed. What China has been and now Japan are following an “as it comes; as it goes” flexible economic policies adapting the ongoing and upcoming market* realities; policies that have been highly recommended by all my articles.

However, even recommending the governmental involvement as an “invisible hand” to boost and maintain market development** particularly into environmentally friendly energies and industries, for such policies’ longer term market equilibrium some definite changes and enchantments are necessary: thus whereas the current Capitalism relies on the large transnational corporations to “export” development under the conditions of shady business; lower taxation, environmental and consumer protections, the so called Market Economics relies on Small and Medium Enterprises to steer business activities, and thus prompt employment and Fiscal stability whereas a strict rule of law in business; enhanced environmental and consumer protection laws are considered as preconditions for marginalizing the unfair market* competition and thus raising their market* security and lend-ability. The pro-active and counter-cyclical governmental “invisible hand” is considered necessary to keep deleveraging wealth inequality through social redistribution; however, the usage of the market forces for maintaining market equilibrium is paramount thus imbalances are prevented. Moreover, a system of probability in economics when economic tools are used as parameters is also necessary for succeeding such relative market equilibrium, because the mathematical principles would not work in such a complex market* environment. In my works the so-called Quantum Economics i.e. Market Economics is a foundation for making possible the rest of the market* approaches be implemented without causing major market* upheavals. The “as it comes; as it goes”’ economics could only logically work if Quantum Factors are used to leverage or deleverage markets*’ buildups when the needs arises, and my works uses such approaches to setup a market* system of economics called Market Economics. System that peaches for full employment boosted by market* noise of a relatively fair market competition supported by targeted investment national and global into environmentally friendly industries and products, and carried on mostly by small and medium enterprises and investors, whereas the large businesses and investors are not discounted in anyway: in the opposite their role is substantial. Social and infrastructural expanses are not considered just expenses anymore, but partial equities used to leverage the market variances: as market* tools, indeed.

The Market Economics comprehends ongoing globalization and rising productivity as main motors for market development by environmentally friendly approaches on a global scale in an interdependent and interconnected world. It is not a Budgetary and Scares Recourses Economics, even so market competition on micro and macro economic levels well complies with such economic principle, however, on a larger scale neither budgetary nor scarce recourses as economic principles are considered bounding. Capital and Debt are considered secondary to Environmental Protection and Market Development whose are attached to the Inflation/Deflation instead. Market* tools are used as parameters to maintain full or close to employment when protecting the Earth environment, Globally.

Joshua Ioji Konov, 2014

Globalization and Consumer Protection


In the system of trickle-down capitalism the consumer protection is counterproductive: along with the business taxation, the strict business laws and environmental protection laws. To succeed quick economic growth a market should lower weight on businesses and investors. The most developed economies under the pressure of democratically elected officials and the public opinion have developed stricter than the developing and undeveloped economies consumer protection laws: entailed by constant struggle between lobbyists and public pressure. In some developing economies the consumer protection is consciously avoided whereas in undeveloped such it is ignored all together to attract foreign investors and large transnational corporations.

For years the developed economies and their Central Banks, and the international financial institutions such as WTO and IMF, ignored the subject of promoting strict consumer protection laws to the rest of the world with the very simple idea to let the transnational corporation roar free that finally should have prompted global economic growth. However, the ongoing Globalization and rising Productivity, the Transnationals the Chinese Industrialization, the Internet, and the outsourcing and moving of Industrial Production have brought a new global market of close economic intercorrelation, and of a tipping off point of global industrial overproduction limiting the ability of many developed and developing countries to manage the necessarily for their fiscal stability economic growth, thus the global economy has come from a pro-supply factor to rule economics to a pro-equilibrium on the demand side factor. The weak consumer protection laws was an market i.e. economic agent that could prompt fast economic growth, which market agent is becoming counterproductive under these new global market conditions, whereas in the opposite an enhanced strict consumer protection laws’ market agent would bring more employment to a market i.e. economy and globally so. This change of values was proved by the widespread indebtedness of many developed, developing and undeveloped economies, which are straggling to keep their rising social and infrastructural expenses with their under-performing economic structures: the inequality, the deteriorating middle class, the increasing environmental pollution particularly by the undeveloped and some developing markets where the use of fossil fuels and old cars is substantial. The weak consumer protection laws are supply related while the new problems are lack of demand related, whereas the struggling to keep adequate employment markets is a pro-supply economics.

The consumer protection laws are demand related that will improve the quality of goods and services, cutting on officials and corporate managements’ corruption and fraud by giving to the consumers rights and voice. It will press businesses to carry out more responsible products and services development and promotion. It will boost the goods and services quality that will require more R&D and therefore more educated employment. On a global scale it will cut down on white collar crime: human rights violations. It finally will bring economic growth based on natural market forces.

By Joshua Ioji Konov 2014

         

Poverty and Pollution How Inequality will destroy Earth!


Poverty and Pollution

How Inequality will destroy Earth!

The tight lenders leech on the poor undeveloped countries creates hazardous issues that harm the Earth environment and potentially will destroy it. The use of coal and wood for heating, the driving of old vehicles, the garbage disposal and water contamination, the relentless woods destruction relates a lock of market i.e.economic development;

Distribution of Wealth: Inequality in 21st Century
 The ability of Large Transnational Corporations and Investors to outsource and move industrial production, and invest globally has helped them gain profit in time of worst 2007-9 recession and post-recession accelerating and expending inequality;

“Many corporations have a greater turnover than the GDP of most countries. Of the 100 largest economies in the world, 52 are corporations and 48 are countries, and these corporations have sales figures between $51 billion and $247 billion.

Seventy percent of world trade is controlled by just 500 of the largest industrial corporations, and in 2002, the top 200 had combined sales equivalent to 28% of world GDP. However, these 200 corporations only employed 0.82% of the global work force.

In the US, ninety-eight percent of all companies account for only 25 percent of business activity; the remaining two percent account for nearly 75 percent of the remaining activity. The top 500 industrial corporations, which represent only one-tenth of one percent of all US companies, control over two-thirds of the business resources in the US and collect over 70 percent of all US profits.

According to the International Finance Corporation (IFC), inflows of foreign direct investment to the emerging markets have grown by an average of 23 percent per year between 1990 and 2000. The combined value of stock markets in emerging economies is set to exceed $5 trillion in 2006, and has more than doubled in the past decade.

In 2005 the number of millionaires globally swelled to 8.7 million, 5.7 million of whom are based in North America and Europe. Forbes reported a 15% rise in the number of billionaires since 2005, who now have a combined worth of $2.6 trillion.”[ Share the World Resources http://www.stwr.org/multinational-corporations/key-facts.html

While the middles class in developed countries has been deteriorating in numbers, and poverty has stricken many individuals and countries around the Globe.

In current research we therefore extend the work reported in “Leveraging Inequality” (F&D, December 2010), which dealt with only the United States, to include an open-economy dimension. We find (see Chart 1) that what unites the experiences of the main deficit countries is a steep increase in income inequality over recent decades, as measured by the share of income going to the richest 5 percent of the country’s income distribution.

This increase in inequality has contributed to a deterioration in the richest countries’ aggregate savings-investment balances, as the poor and middle class borrowed from the rich and from foreign lenders. This, along with the other factors mentioned above, can fuel current account deficits.

Indeed, we find that as income shares of the top 5 percent increased between the early 1980s and the end of the millennium, current account balances worsened. For example, in the United Kingdom, an 8.7 percentage point increase in the income share of the richest 5 percent was accompanied by a deterioration in the current account–to-GDP ratio of 2.7 percentage points.[ Unequal = Indebted

imbalancesFINANCE & DEVELOPMENT, September 2011, Vol. 48, No. 3

Michael Kumhof and Romain Rancière

Distribution of Wealth: Inequality in 21st Century

]The Earth environment has suffered farther deterioration by being polluted through burning coal and wood, by cutting woods and destroying rain forests, by driving old vehicle, by disposing of garbage and row sewer and etc.

Mongolia is the world’s most polluted country and also home to one of the world’s most polluted cities — Ulaanbaatar. The country’s main sources of pollution are its traditional coal-fuelled stoves and boilers used for heating and cooking, as well as congested traffic and old cars. Heating is essential for the survival of its people for about eight months of year. The country uses everything from coal, wood to refuse, such as black tar-dipped bricks and old car tires to fuel stoves and boilers.[ http://www.cnbc.com/id/44781282/page/11%5D]

Neither of the top 10 polluted sites are in the U.S., Japan or western Europe. However, a lot of the pollution in poorer countries has to do with the lifestyles of richer ones, noted Stephan Robinson of Green Cross Switzerland—for example, a tannery in Bangladesh that provides leather for shoes made in Italy that are sold in New York City or Zurich. “The pollution we see is not coming from the major global industrial companies, it’s all from small mom-and-pop shops, which prepare the raw materials that we then later use,” Robinson said. Or, in the case of Agbogbloshie, Ghanaians are polluted by the electronic devices Westerners have already used. Local people in such areas, Robinson added, “are very often polluting their environment not because they think it is fun but because it is a question of survival.[ http://esciencenews.com/sources/scientific.american/2013/11/05/the.worlds.10.most.polluted.places.slide.show%5D

 The most developed countries are taking prompt action to improve their environment through investing and tax initiatives to boost green energies and through enforcing strict environmental laws and regulations. However, it is not possible to take on some consistent environmental protection policies on just national level. To prevent from farther harmful environmental deterioration long-term Global policies should be implemented by the International Financial Institution of WTO, WB, and IMF widely supported and financed by the most developed economies of the US, EU, China, and Japan. But, most important, the ways the global marketplace “business as usual” should evolve into more engaging ways promotion of a Green Market Development for many if not all undeveloped markets i.e. economies. An end of the budgetary debt economics that relates economic growth to productivity and investment only, by keeping firm hand on borrowers: individuals or countries alike, is necessary. Even from purely historical stand point of view the system that had performed well in North America, Western Europe, and Japan until the beginning of the 21st Century has been tipping off: 

  •  the Globalization enveloped the entire globe with a very few exceptions,
  • the Internet and rising Productivity made outsourcing and moving of industrial production much easier,
  • and China has emerged as a great economic industrial power

 Developments that have distorted the market equilibrium in many developed and undeveloped markets alike (with the exception of China, Germany and Japan after the Abenomics) by bringing long-term high unemployment and underemployment, debt accumulation, falling standard of living, and rising inequality that were shaking the foundations of the Capitalism, which short term relatively high lending rates, low market security, weak business and intellectual property laws, weak consumer protection and environmental protection laws that were suppose to boost productivity, investment, and growth have established conditions for bubbles and recessions, instead: the 2001 $ 2007 Recessions followed by sluggish recoveries exemplify it.

The conception of using market i.e. economic agents and tools in an “as it comes; as it goes” attitude to prompt Market Development i.e. economic growth is called Market Economics. It has become possible for short-term in History: since the turn of the new century, which brought some new capability for industrial overproduction by the same development that distorted the existing Capitalism. Whereas the technologies that improve Productivity, the Globalization, and China that utilized at best these new opportunities could become the market i.e. economic agents to offset the possibilities for shortages and inflation to allow long-term market development.

 The Market Economics utilizes on such counterproductive for the Capitalism developments to prompt Market Development into targeted Environmentally friendly industries that could prevent from further pollution causal of an industrial production, productivity and investment approach, and in the same time create employment, replenish fiscal reserves, and allow a more balanced market approach in economics.

 The economic agents in Market Economics are flexible parameters that adjust most recent fluctuations on “as it comes; as it comes” probability principle. A high Market Security is paramount to improve the investment transmission-ability, whereas less developed and undeveloped markets, and small businesses and investors are given access to relatively fair market competition. Targeted into Environmentally friendly industries and technologies capital infusion should be adjusted to the Inflation (not to the budget). On local for the developed countries e.g. Detroit and international for the International Financial Institutions the “invisible hand” should prevent from pollution, wasting of resources, destruction of woods, wetlands, etc.

Joshua Ioji Konov 2014

Social and Infrastructural Expenses to Help Balancing Markets i.e. Economies


Social and Infrastructural Expenses to Help Balancing Markets i.e. Economies

 social expenses include social benefits, pensions, educational, unemployment expenses
market equals economy, economic
Market Economics is about Demand and Supply (it is not an error of the Supply and Demand of the past) of goods and services that have gone Global, which complicates the ways Economics explains these processes. Some market sectors have become less Nationally dependent than Globally such, therefore the inflationary forces could not be explained anymore in a closed marketplace as it was before. The ongoing Globalization, the rising Productivity, and the Chinese Industrialization have accelerated the up mentioned processes that have given the opportunity to many markets to develop into not industrial production related market sectors without prompting necessarily Inflations, whereas the Deflations instead have become bigger issue.
 The foundations of current Economics has been less or more a Socialized Capitalism, which lays on the Industrial production. The most developed markets are called Industrialized Economies. However, the most recently expanding Global capabilities of industrial overproduction has invoked the needs for reevaluating Economics and finding ways for Fiscal balance by not accenting on industrial production and industrialization: the most common method is by imposing high taxation. Social and Infrastructural Expenses have become a main tools for re-balancing market demand to supply: however, high National debt run by the most developed countries, but China, has undercut the abilities of governments to continue such policies; Neo Liberals, Big Business and Investors have put political pressure on these governments to reduce Social and Infrastructural expenses. The situation with less developed and undeveloped markets is even worst because of their dependence from their debt holders: the World Bank, European Union, IMF, WTO, which serve their lenders and apply constant pressure to prevent these countries from adding more debt to the already accumulated such.
The unorthodox approaches in Economics by China to use their public sector and stimulus packages for improving consumption have proved productive, as well the Abenomics and the US Quantitative Easing have had. The indifferent European Union orthodox approach has proved a disaster. All of these are good proofs for the changing Global markets’ realities and the need for action by the “Invisible Hand” to re-balance markets under these new arousing realities.
 However, the market interventions by governments or international financial institution may finally backfire and prompt new recessions if the ongoing processes are not properly apprehended and long term policies are not implemented. Policies that can boost market development i.e. Economic growth must prevent from bubbles and major market imbalances. Whereas the Social and Infrastructural are market tools to be used for maintaining markets’ balance they also could be used to prompt market development by targeted capital injecting into Market Leaps without prompting Inflation. If properly executed such Market Leaps could accelerate business and investment activities in these particular market sectors. What is necessary before using these market tools is a detailed evaluation of this market overall abilities to absorb such expansion of consumption and business. Market Economics is an “as it comes, as it goes”’ approach in Economics that tolerate the usage of all market tools to expand and manage market development, therefore, if Social and Infrastructural expansion could prompt employment, consumption and business activities without excessive Inflation, than such approach is considered appropriate. The Uncertainty Principle and the Probability Principle are used for simulations of Market Leaps and prevention of Bubbles. Market Tools are used as parameters for maintaining relative fluency. Parts Market Equilibria are used to maintain General Market Equilibrium. (SEE the related Papers and Articles).
 The Market Economics considers Social and Infrastructural Expenses to certain percentage as equity: such change is made possible by the Globalization and rising Productivity, which allow some extra consumption and business activities balanced by the globalized markets overproduction. Even partial equity such expenses are supplementary approach toward Market Development that that supports the main production and services based approach. Social and Infrastructural Expenses could have a good use for fighting deflation (example for such is Japan).
 The percentage of equity Social and Infrastructural Expenses reflects ta market’s success in adapting the principles of Market Economics, not that much the level of Market Development i.e. Economic Development. An open market with adapted Rule of Laws: Contract Laws, Consumer Protection Laws, Environmental Laws, Intellectual Property Laws, Insurance & Bonding Laws may well be suitable for using such expenses to start a Market Leap, even though this market i.e. economy is not developed in compare to the most developed markets.
 Joshua Ioji Konov 2014

Can the Global Investment and Productivity Steer Growth


Can the Global Investment and Productivity Steer Growth

In the ways the Global economy works, the expectations for the investment and productivity as fundamental economic agents for growth vary in different countries:

Whereas the European Union relies generally on such to prompt and maintain economic growth, in the United States the market interference was much bigger through Quantitative Easing and Stimulus Packages, it when farther in Japan, and even farther in China whereas the market interference is basically running the whole economy through targeted stimulus packages, establishing tax free regions, using the state owned businesses to raise salaries, income and internal consumption. Unless in the US whereas the politics interfere with the government policies: in Japan and China such policies are roaming free: the “as it comes: as it goes”’s Economics of 21st Century has arrived and whoever understood it right and start using it indiscriminately from political views and ideas will benefit. The winners clearly are these the last one. To rely mostly on the Investment and Productivity to steer and stir up the markets into growth and possible employment has become a dream for a few economists in the West that excuses them from the failure to oversee and overcome the 2007-9 Recession that almost crushed the Global economy.

According to the Organization for Economic Cooperation and Development (OECD), the United States had the fourth highest GDP per hour worked ($59.50 USD) in Oct. 2011, behind the Netherlands ($59.60), Norway ($75.40) and Luxembourg ($78.50). Research at the U.S. Bureau of Labor Statistics shows that between 2000 and 2010, real GDP per hour worked in the United States grew from $48.47 to $59.28, or 22.7%. Productivity was clearly on the rise, and at a fairly quick clip.

The OECD also indicates that between 2000 and 2010, average annual wages for full-time employment grew from $49,981 to $52,607, or 5%. They were basically stagnant, but how did this happen? (For a look at GDP and what investors look for, read Can Global Investors Profit From GDP Watching?)

What the Chinese took off on the Recession was the practical ideas that relying only on the National and International Investment and the rising Productivity, which relies on the simple ideas of lower taxation and weak regulations to prompt economic growth causa finita est, therefor, they started targeted market interference by watching the Inflation and possible Bubbles, so the system has worked much better than everywhere else. The Social and Infrastructural Policies have been positive economic tools, too. What the Chinese discovered, followed by Japan, was that by using the “invisible hand” was much more effective than waiting for some investors to decide to boost their economies.

What the EU and now the US are doing is digging themselves into a perpetual circle of unemployment and underemployment that consequently will push them to start using so called unorthodox economic agents and tools to prompt long term economic growth. The Investment and Productivity always follow the winners, and guess who will be the winners if a long term economic policies are not undertaken.

Joshua Ioji Konov 2014

Probabilities in Market Economics


Market* equals economy, economic, 

 

For the last 20-25 years. the accelerated Globalization, the rising Productivity, and the Chinese Industrialization have accelerated the moving and outsourcing of industrial production by the large transnational corporations from the Most Developed Markets have brought more complex Global economic situation of industrial overproduction capacity, higher unemployment, rising national debt, increasing income inequality, and etc negative developments that exceed the abilities of currently used economics to deal with it appropriately. The Uncertainty Principle, which changed Physics, in some degree applies to Economics bringing the Principles of Probabilities to manage the complexity and the uncertainty of these new developments. However, unlike in Q uantum Physics in the Quantum i.e. Market Economics the Plank Constant does not apply but a new J Constant should be applied, which vary between (-2…….0………+2) from the lowest to the highest possible Market Security: Market Development is a seasonal Entropy/Equity Market Place. Through a Market Leap prompted by targeted injection of capital into a particular market sector or Natural Market Investment an accelerated Entropy/Equity process could establish artificial accelerated market activities, however if the Market Security is higher than a (0) a Market Development higher than (0) is possible. The Globalization, which supports markets against Inflation in some market sectors, allows Market Leaps (accelerated market activities).

The general market equilibrium evolves into part’s market equilibrium a complicated structure of interdependence between market sectors in a Globalized marketplace in which some sectors are more globalized than others, and therefore market sectors vary in their inflationary susceptibly. The overall lock of inflation in the US Economy, for this period of time, presents a prove for the power of these new forces.

Market Security is a fundamental Market Agent that could prompt Market Development[ See Table 1]. To succeed Market Security over (0) a fair Market Competition is required, whereas Market Agents such as Large Businesses and Investors, and Small Businesses and Investors should be setup into a equal access to financing. There are two possibility for such: either the Government interfere into Markets by providing additional security to the small business’ loans, which is not market related approach if under a lower Market Security, and in many cases are politically motivated reversible actions , or when targeted Market Sectoral investments are injected into a higher Market Security that would consequence into seasoned Market Development (market equilibrium when expanded business activities). Current market conditions are with very low Market Security: the large businesses and investors are given advantage in a a lock of Rule of Laws’ Business Environment, therefor, any capital injections under such condition could not boost Market Development, these may stir temporally business activities bit cannot succeed seasoned Market Development (example for this is the City of Detroit, where for years many capital injections could not succeed Market Development); currently used Economics tolerates low Market Security, because such is considered helpful to trickle-up capital into the very few, who were suppose to trickle-it-down into business activities and economic growth, however, the Globalization and rising Productivity have provided Global opportunities for such reinvestment, and the expanding wealth inequality results of these new developments: the large transnational corporations and the direct international investment are the economic agents for these global opportunities. Enhancing the Rule of Law in Business: Liability Laws, Contract Laws, Consumer Protection Laws, Environmental Laws, Insurance & Bonding Laws, Intellectual Property Laws will improve the Market Security by marginalize the inequality in the market competition.

The J Constant will go above (0) and therefor if capital injections are properly done Market Development could be succeeded.

The Probabilities’ Principle is to be used:

*to give the right levels for possible Capital Injections without prompting Inflation/Deflation.

*To show the amount of possible such Capital Injections.

*To oversee the possible results,

*and if some emergencies arouse the possible actions to be taken that would disperse the negative bubbles.

Simulations, historical and prospective by using Possibilities’ Principle are in a working process.

Joshua Ioji Konov 2014

1 For centuries, scientists have gotten used to the idea that something like strong objectivity is the foundation of knowledge. So much so that we have come to believe that it is an essential part of the scientific method and that without this most solid kind of objectivity science would be pointless and arbitrary. However, the Copenhagen interpretation of quantum physics (see below) denies that there is any such thing as a true and unambiguous reality at the bottom of everything. Reality is what you measure it to be, and no more. No matter how uncomfortable science is with this viewpoint, quantum physics is extremely accurate and is the foundation of modern physics (perhaps then an objective view of reality is not essential to the conduct of physics). And concepts, such as cause and effect, survive only as a consequence of the collective behavior of large quantum systems.2

2Definitions

Probability is a measure of how likely it is (or how probable it is) that a given event will occur. The more likely an event is, the higher its probability. The sample space is the set of possible outcomes within a given context. The sample space is equivalent to the universal set. An event is a subset of the sample space. The elements in the event are referred to as favorable outcomes. The word “favorable” is not used to mean “good” or “desirable” in the normal sense. A favorable outcome means only that the event has occurred. The probability of an event is the number of elements in the event divided by the number of elements in the sample space.

3 The Planck constant (denoted h, also called Planck’s constant) is a physical constant that is the quantum of action in quantum mechanics. The Planck constant was first described as the proportionality constant between the energy (E) of a charged atomic oscillator in the wall of a black body, and the frequency (ν) of its associated electromagnetic wave. This relation between the energy and frequency is called the Planck relation:

4 Table 1

Untitled

Md = Market Development

LIR = Lending Interest Rate

En = Market Entropy

Eq = Market Equity

E = Market Equilibrium

EE1= Market Leap

“As It Comes; As It Goes” Economics of the 21st Century; the End of the Budgetary Economics


“As It Comes; As It Goes” Economics of the 21st Century; the End of the Budgetary Economics

Joshua Ioji Konov, 2013

INTRODUCTION

The Globalization, the rising Productivity, the Internet and the Chinese Industrialization have established some very new conditions to a global marketplace of vest industrial capacity mobile and highly effective that changed Economics forever from a pre-supply Libertarian and Keynesian budgetary approaches into the unorthodox innovative Market related pro-equilibrium approach. The Quantitative Easing, the Abenomics, the Chinese targeting certain areas for economic empowerment, the Federal mortgage security targeting lower lending rates in the US, etc are the first steps to an Economics of “as it comes; as it goes approach” which does not count just on a market liberalization through deregulation, low business taxation, and rising productivity to prompt Economic growth, thus the “invisible hand” has become more active. However, the economists and the Economics still retain their highly ideological stand up by either not evaluating these new developments or coming back to the status quo by just ignoring these developments as never happened.

CHANGE (Market I.E Economic, Economy)

As the Physics has changed from its orthodox ‘assertive’ knowledge into the uncertainty of Quantum, whereas probability theory so the Economics should change its ‘assertive’ ideologically motivated approaches of trickle-down into a ‘as it comes; as it goes’ Market Economics, whereas market agents and tools are used adequately to maintain market equilibrium and market development.

In real Marketplace such approach means by using Monetary, Fiscal, and others the Central Banks and Governments to target particular market sectors and areas to boost their development, sectors such as Alternative Energies, Tourism, Farming, etc should be prioritized. The ‘invisible hand’ that boosts certain market activities could be only implemented if markets transmissionability is appropriate to absorb and transform the liquidity into market equity e.g. to establish market equilibrium by maintaining low inflation or deflation. High market transmissionability could be achieved by enhancing the ‘rule of law in business’ through changing the limited liability corporate laws into unlimited such, by enhancing business insurance and bonding, by enhancing contracting laws, by enhancing environmental and consumer protection laws, etc then the ‘invisible hand’ of targeted liquidity and fiscal stimulus would work its best through the marketplace to buildup market development.

Currently used by the Central Banks monetary policies through lowering or raising Primary Rates a general market equilibrium approach should change into using lending rates, fiscal policies and targeted investment parts market equilibriums approach e.g. is the China’s handling their Real Estate bubble.

The Uncertainty Principle applies to Economics whereas the Probability Theory shows the ways market agents and tools are used as parameters to adjust market fluctuations; however, in comparison to the Quantum Mechanics the Market Economics i.e. Quantum Economics’ equations, oscillators, theorems, and etc differ in principles and values.

GUIDING LINES

Market Economics does not put all markets i.e. economies under the same constant, whereas different markets posses specifics that should be taken in considerations in applying the best for these markets oscillators. Even when the free market entrepreneurship of the Small and Medium Enterprises is considered the best and most productive approach toward market development the ways some countries have their Markets/Economies entailed to specific social, medical and educational policies by more aggressive governmental involvement should be taken in considerations when simulations are put together.

MARKET COMPETITION   

However, for best performance, the principles of an open market competition whereas Small and Medium Enterprises and Investors are set on equal opportunity competition are paramount for a long term success. The marginalization of advantages Large Transnational Corporations & Investors is one of the principles for Markets to function properly, so to speak market transmissionability and overall market development could not be achieved if the market competition does not reach relative fairness.

GLOBALIZATION

THE Globalization of the Marketplace should be used to prompt business activities, build equity, and maintain market development, but for such to be fluent the principles of Market Economics must be implemented globally, which is highly achievable in the present day open politically and entailed economically world.

Joshua Ioji Konov, 2013

SEE Market Economy under Rapid Globalization and Rising Productivity http://ideas.repec.org/p/pra/mprapa/48750.html

Partial Equilibrium by Sectors Intervention Instead of General Equilibrium’ Central Banks Interest Rate Adjustment by Joshua Ioji Konov June, 2013


Partial Equilibrium by Sectors Intervention Instead of General Equilibrium’ Central Banks Interest Rate Adjustment by Joshua Ioji Konov June, 2013

Abstract

The FED’s Federal Funds Rate and other Central Banks Rate adjustments are targeting the entire market (i.e. Economy) effect could be deleveraging by raising it or boosting by lowering it that materializes the theory of General Equilibrium. However, because these sectors are becoming more globally than nationally connected such general approach did not reflect the possibilities of using the Partial Equilibrium approach by Monetary (lending rates), Fiscal, and Regulatory means to adjust some sector redundancies, whereas allow the rest of the economy continue market development (i.e. Economic growth).

 Introduction

The economic data[1] by sector from the last two recessions the 2000-01 and 2007-9 ones shows the unevenness with which these sectors fluctuate, thus the overcapitalization in the Internet Bubble 2001 or the Real Estate 2007 compared to decrease in capital of e.g. Manufacturing. Hence differences are mostly exogenous because of the ongoing globalization and rising productivity, Chinese industrialization, the Internet, and the overall improvement of manufacturing technologies that have allowed outsourcing and moving of industrial production and capital much easier than ever in history; factors that support long terms of lower inflations toward deflations developed markets (i.e. Economies).  Developments that make a different market (i.e. Economic) sectors more globally interconnected. As we see in the Table 1- NASIC sectors differ vary substantially in growth therefore before the 2007-9 recession, possible redundancies targeted Federal Funds Rate adjustments[2] are pro-cyclical in the case of Manufacturing, Wholesale, etc., and   counter-cyclical in the case of Real Estate, Construction, and related Industries. Currently used economics does not take sufficiently enough the new developments (see above) and rely on statical a combination of Libertarianism and Keynism trickle down approaches that performed poorly in the recession as well post recession times. Seemingly, the most unorthodox approaches of Quantitative Easing, Abenomics, General Governmental intervention in business e.g. US Auto Industry, Financial Sector, etc., and e.g. Extended Unemployment, Foreclosures, etc., have had the best results over the markets (i.e. Economies). Moreover, the Chinese approach in cooling Real Estate bubbles and overcapitalization of the sector could be considered the most effective up to date: through Monetary, Fiscal and Regulatory means the Chinese government targeted some individual sectors such as Real Estate, Construction, and related industries; a method that proved quietly effective, and method considered by the Market Economics as one of the Future. However, even though individual markets (i.e. Economies) posses their nuances and specifics the fundamental principle of Market Economics that economic tools are to be used “as it comes; as it goes” approach, which will reflect the specific market (i.e. Economic) developments that basically reflect all different markets (i.e. Economies) in a way of justifying the unorthodox means when needed. The change from using Central Banks’ Interest Rate on a general equilibrium approach to one using different market tools on a partial equilibrium of the individual sectors in need for intervention, whereas not touching sectors not in such need. This paper will scientifically justify such innovative approach.  (To be continued)

 

 


[1] Table1 [2] Table 2ImageImage

 

Strategies for Sustainability of Environmental & Resources Efficiency


http://mpra.ub.uni-muenchen.de/id/eprint/43373

Strategies for Sustainability of Environmental & Resources Efficiency

Joshua Ioji Konov

October 4, 2012 

Chicago IL, the USA

Joshua.konov@gmail.com

Abstract

The best global model for expanding Alternative Energies and Environmental Protection is through using market equilibrium, whereas governmental subsidies and fiscal stimulus to be just supplementary. Accelerated Globalization and rising Productivity’ Market equilibrium depends on matching consumption demand and supply through price deleveraging[1]. Hence is achievable in a more fair market competition only by changing market (i.e. economic) agents: from presently used trickle-down economics that stimulate big business and big investors[2] to a more market related economics (Marketism) that would stimulate Small & Medium Businesses and Investors (SME&I) boost business activities and related employment, fiscal reserves and over all market utilized consumption.

This paper is based on two previous papers[3]&[4] and Bibliography.

However, it explains and adds the theory from a new prospective.

Introduction  

Longer-term market development strategies for environmental protection and the adoption of environmentally friendly energy generation and alternative ways of consumption to reduce pollution and waste are essential. Such strategies should be done on a global scale too, whereas the interdependence is real. Shocks apparently emanating in the United States have led to the largest global slowdown since the 1930s[5].

In general, the alternative energies’ technologies and environmental protection are expensive prepositions unreachable by less-developed markets (i.e. economies). While market (i.e. economic) stagnation has been accelerated by the last 2007-9 Great Recession the probabilities for many greatly underdeveloped markets to adapt some advance technologies for environmental protection and reduce pollution and wasting recourses are practically incomprehensible. The ongoing globalization and rising productivity have established some very new market (i.e. economic) conditions of deindustrialization of some developed markets as the US, most EU, and Japan ones, and conditions of lack of possibility for industrialization of other undeveloped markets as Eastern Europe, Southern Europe, many African and e.g. markets.[6] This climb is a permanent, irreversible change. With China and India — which together account for almost 40 percent of the world’s population — resolutely moving up this ladder, structural economic changes in emerging countries will only have more impact on the rest of the world in the future.”[7]

 The long-term recessions could hardly be self-adjusting by cyclical market forces as it was observed in the last recession this is why the governments intervened in the markets (i.e. economies) through stimulus packages, equity acquisition in the AIG and GM cases, or even farther through Quantitative Easing. Hence, market equilibrium was not left on its self-adjusting powers but it was reached by direct governmental actions to ensure the overall market stability.

The trickle-down economics considers self-adjusting business cycles as necessities for cutting redundancies; a system of market forces based on rising productivity and investment of shady business practices and reduced business laws of tricked-up concentration of capital promoting large transnational corporations and large investors. Capital that would trickle-down to markets (e.g. economies); these agents are supposed to prompt and maintain market (i.e. economic) development (i.e. growth). A system that had brought economic growth for a few Centuries in the US, many EU markets (i.e. countries) and Japan the successfully built developed markets (i.e. economies). However, with the most recent accelerated Globalization, rising Productivity, China’s industrialization, the overall advances in technologies[8] and Internet the global market equilibrium has been greatly affected*[9]. Hence, the marginalizing US income and declining middle class[10] and  Transnational Corporations, which are considered by the modern economics as frontiers of high productivity and global growth, however their actions have had negative effect in many occasions on the market development of countries as Bulgaria, Romania, Latvia, etc., countries losing equity by letting existing infrastructure deteriorate, reducing their Social Policies and Medicare, and finally deepening into general disproportioned inequality and weak consumption (market demand) into national debt.[11]For the last 20 years[12] and the last 2007-9 Recession’s severity was the best example for the imbalance (i.e. disequilibrium) in the local and global “demand-to-supply”[13] marketplaces. The Imbalance (i.e. disequilibrium), which could not have been adjusted but by direct governmental interference and when under the emerging conditions in the European Union interference was not properly applied the consequences were recessionary well observed (e.g. the EU marketplace)[14]. Modern days global monetary and fiscal policies by the MDIE that have changes after 1979 from PMAF to AMPF policies[15]. A large deleveraging of foreign assets by Belgium and Swiss banks (about 30 percent of foreign assets), followed by British and German banks (with deleveraging of respectively 24 percent and 21 percent), US and Dutch banks (13 percent), and French banks (10 percent, however the up to 40 deleveraging by all factors of banking can cause high losses and a collapse of international banking activities.”[16]

The faster action by the Chinese, the Japanese and the US governments’ the better results were observed, the slower and indecisive action by the EU the worst and less successful market (i.e. economic) results. Most studies reach the broad conclusion that fiscal policy is cyclical in developing markets and countercyclical or acyclical in industrialized ones[17],

Long-term strategies to protect the environment directly reflect a consistent global market development. Hence, pricy technologies for reducing pollution and deforestation could be achieved under the most recent global market conditions only by business diversification, business enhancement, and overall development in a more secure marketplace. The Rule of Law[18] of contract laws, intellectual protection laws, adequate insurance and bonding[19], etc raises the market security establishing conditions for more lend-able SME&I and less-developed markets, which combined with the artificial for the markets Social and Environmental Expenses becoming more equitable in such more secure marketplace might invoke major market noise. In Maslov[20] the theory of complexity in monetary policies, which could be achieved by diversity in currencies in this paper is extended to micro-macro market complexity of putting new weights on business from easy business of shady practices into more regulated business. The new complexity (entropy)  on a global scale from micro-macro market level will bring similar effect to the real marketplace (i.e. Economy), thus the complexity needed will stop the coming debt disaster and reveres it under the new conditions into global development[21].

This paper adopts the necessary technologies and approaches to prevent global worming and exhaustion of resources into a system of relative market equilibrium under the conditions of global market long-term development. However, to succeed such substantial and fundamental  change of approaches toward less developed markets is needed, whereas from general market (i.e. economic, business approaches) that promote big business and big investors into one that does promote and maintain relatively fair market competition.

The Marketism is based on free entrepreneurship as the motor for market development (i.e. economic growth). Moreover, the Social and Infrastructural expenses alone with Lower Interest Loans and Subsidies are included as market agents to prompt market development, however artificial to the markets agents that to be used only in cohesion with the natural for the markets free business market agents. The Marketism accepts randomness as market (i.e. business) development (i.e. cycles) whereas the market tools coming out of the market agents (i.e. economic agents) are used to succeed market equilibrium. The accumulated in time market redundancies under this new system of Marketism should be extinguished and deleveraged by using thus natural and artificial market agents, whereas parameters in more like system resembling Quantum Physics called Quantum Economics.

Marketism and Environmental Strategies         

Market development (i.e. economic growth) not relying on the governments but mostly on the free entrepreneurship in the conditions of Global Worming and Decreasing Earth Recourses could be only achieved if global market security is enhanced that is in the fundamentals of the Marketism, whereas Environmental Strategies are not anymore uncompetitive redundancies but part of the market entropy[22]. The Capitalism is based on lower economic security, relatively high lending interest rate (exclude Tier I), shady business practices, Currently, these standards do not create binding legal obligations on U.S. corporations and state law fiduciary duty standards do not compel corporate Boards of Directors to act in furtherance[23] of sharply fluctuating business cycles, etc the Marketism is based on higher market security, relatively lower lending rates, the rule of law in business, adjusted randomly market fluctuations by using statistics to locate and parameters to disperse negative built-ups. The formal firms are the most severely affected by financing obstacles[24]. The Environmental Strategies could become part of the Marketism in a more diverse business entropy being redundant under the Capitalism as uncompetitive. Under the Capitalism, the Environmental Strategies could be developed through governmental subsidies and fiscal breaks only.

Market Security

The productivity and the investment are the agents for economic growth in the Capitalism: business laws and regulations, taxation to the rich, social and infrastructural expenses, consumer protection laws, even intellectual property laws, and the environmental and consumer protection laws, e.g. are breaks in the way to economic growth. However, in time, under the social and market pressures the business laws and intellectual protection laws have been better implemented by the best-developed economies than by the developing and undeveloped economies. The developing and undeveloped economies are pressured by the International Organizations (WTO, the WB, and the IMF) toward lower taxation, relaxed business laws and regulations to attract foreign investment IMF-supported market reforms, with their emphasis on fiscal reforms, have affected the procyclical behavior of government spending in developing countries.”[25]. and thus to boost productivity. Pro big business has been considered the only way for global economic growth, therefore some time fraudulent corporate actions have been overlooked. Corporations may have assets and liabilities, but they don’t commit crimes — their officers, executives and employees do. And the 23-page letter agreement between Tyson and the Department of Justice, the criminal information, and the S.E.C.’s public statement of facts all withheld names, identifying the participants only as “senior executive,” “VP International,” “VP Audit” and so on.”[26] generally and 151–153 the transnational corporations : “a large fraction of disputes related to foreign investments nowadays is settled by private arbitration and not by national courts. So corporate law firms and accounting firms add yet additional layers to routine transnational rule-making.”[27] In history such approach had worked fine until the major changes in the last 20-25 years, whereas the major tip-off in industrial production has occurred with the mentioned above* The out of balance system brings the necessities for the Marketism becoming achievable as never before in history. The priority of this new system is to improve the market security establishing the conditions for lower lending rates, and to boost SME&I and Less Developed Countries’ market participation. On regional markets or on the global marketplace the effect of improving the market security is to lower interest lending rates that will allow more participants, more business entropy and more consumption (i.e. market demand). By its nature, such change is a market revolution; however, in details it is a very practical micro and macro economic modification of simplified close to the market forces amendments. Achieved high market security would allow long-term environmental strategies’ market related utilization, for these becoming part of the global market competition.           

Market Changes and Enhancements

The market (i.e. economic) agents that work to prompt economic growth (i.e. market development) of the Capitalism do not necessary prompt market development (i.e. economic growth) of the Marketism:

Capitalism

Marketism

Shady business contract laws Strict rule of law in business
Limited liability corporate legal form[28] Unlimited liability corporate legal for decision makers form
Business and market exchanges regulations Business and market exchanges laws
Vague liability and project insurance Comprehensive liability and project insurance, and bonding
Vague intellectual property protection Comprehensive intellectual property protection[29]
Vague environmental and consumer protection Comprehensive environmental and consumer protection
Social and infrastructure as expenses Social and infrastructure as partial equities[30] [31]
WB and IMF as lender WB and IMF as promoter and controller
Pro cyclical economics Counter-cyclical economics[32]
Low Governmental employment and low taxes Balanced governmental employment and taxes to overall market activity
Productivity and investment as main economic agent[33] Business entropy (i.e. noise) and diversity as main market agent
National budget as leading indicator to a country’s economy Inflation/deflation as leading indicator to a country’s market[34]
Big business and investors as beneficiaries  –  compare to SME&I same for small and underdeveloped countries All market participants including Small and Medium business and investors, small and underdeveloped markets as beneficiaries 
Pro supply economic policies Pro market equilibrium market[35] economics[36]
Global currencies merging (i.e. EU) Global currencies entropy

 

The Marketism utilizes on these changes and enhancements to marginalize engraved for centuries market insufficiencies in order to accelerate market activities and overall market entropy under a market environment of well developed global industrial basis and capabilities of the US, Japan, China, Germany, and etc. 

Environmental Protection one of the Agents for Development

If higher market security enhances market entropy (i.e. business activities) and diversity the particular and important market agent – Environmental Protection is to be fundamental to carryon even further this market entropy and the following market development. Markets, which are creating conditions for faster market development and could be pushed by targeted market leaps or consistent pressures on some particular market segments that could bring overall accelerated market development. Alternative energies, farming, and technologies are the one to improve environmental protection, lower pollution and reduce the usage of Earth resources; however, if these are competitive market activities, boosted through subsidies and low rates lending it (the environmental protection) could be the major agent for overall market development. The most important, as mentioned above, is such market agent to be natural to the market competition (not artificial as it is now, because of the uncompetitiveness of high prices, low productivity, ineffectiveness it brings). Thus, if the system of economics creates more diverse and comprehensive market conditions the entropy (i.e. noise) of such market environment would utilize the Environmental Protection as market more efficient agent. By itself, such market efficiency would create employment and working competitiveness being rightly subjective to current market equilibrium. Whereas improving productivity and international investment is a market agent that increase market entropy by its improving efficiency and competitiveness in an market environment of dominance for Large Businesses and Investors, the improving productivity and international investment enhanced by inclusion of more participants is a market agent to increase the market entropy in a market place overloaded with industrial goods and manufacturing capabilities in a market entropy of no oligopolies (i.e. dominance) but relatively fair market competition.   

In a market place with high entropy of business activities the overcapitalization, which in case provoked the 2007-9 Recession would not do such harmful effect because the energies that built such overcapitalization would disperse into other market sections, however preventive actions should be used, too. The transmissionability of a more diverse and active marketplace is to be increasing, therefore any monetary and fiscal actions would have more and faster effect on the overall market (i.e. economy). Generally, under the conditions of lower lending interest rates the market as a whole would be able to accumulate and go through longer-term negative recessionary periods without structural disintegration.

Environmental Protection and Lower Lending Rates

Lower lending rates mean generally higher business activities, on a global scale consequencual of less poverty and underdevelopment. For the environmental protection to become globally effective an global market prospective is feasible only. Pollution from exhausted aging vehicles and primitive heating, deforestation, uncontrollable waste disposal, e.g. are uncontrollable in underdeveloped and undeveloped markets (i.e. countries, economies), but international dependence from pollution is enveloping Earth. Moreover, if hypothetically the global marketplace driven by productivity and international investment noise is industrialized, and global economic growth is succeeded by the currently accepted economics the disproportioned pollution and exhaustion of resources would destroy it all. If, however, the underdevelopment continues the pollution and waste would destroy it too, maybe a bit later.

Considering these two possibilities only a third, more comprehensive is possible whereas many markets (i.e. economies, countries) are given conditions to develop but not by industrialization. I.e., immediately, the question appears, is it possible, anyway?

Industrialization and Market Development

The industrialization is the highest point of development in the Capitalism; the technologies and R&D, education and middle class, taxation and fiscal policies are all directly related to the industrial production[37], therefore with the decline in industrial production overall economic decline is imminent.

Historically, the farming was fundamental for the economy agent the industrial production is the agent now[38]. However, the new global developments* have reduced the opportunities for many markets (i.e. economies) to maintain needed for their fiscal reserves industrial production[39] and for great many others to industrialize. Thus, developed and developing markets alike could not manage their fiscal balance or develop in case, therefore high unemployment, underemployment, fiscal shortages, declining middle class, deficit and national debt[40] have become synonyms of lack of industrial production. While the Economic Growth was not possible but by industrial production; Market Development is only partially dependent on industrial production. Even productivity and investment agent does not lose importance in Marketism the market entropy from enhanced business activities should become market agent prompting market development, too; the market equilibrium in such conditions should be more market oriented than it is now, whereas governmental involvement would be less in percentage-wise in compression. The improving technologies, the internet, the high manufacturing capacity of transnationals and China, the easy moving and outsourcing capabilities, the open global marketplace, e.g. are of great balancing supply market agent.

International Financial Institutions and the Environmental Protection

The international financial institutions (WTO, WB, and IMF) are being founded[41] on the principle of lending and bank controlling: lending on relatively high interest rate and short term to less and undeveloped markets (i.e. countries)[42]. The high risk of the borrowers justified the high rates and short terms. Progressively global security exchange markets have extended their share by trading sovereign debt on free market principles. Both ways, at and after the 2007-9 Recession the abilities of many countries to repay their debt have been declining and fewer countries were daring to borrow from the international financial institutions changing them to transmitters of subsidies and emergencies help funds. While public flows plunged in all countries, there is an indication that grants were replacing loans in low-income countries, which is consistent with donor commitments[43]. The targeted by the international financial institutions global economic growth has decelerated into global slow down or recession but a few exceptions. This process, however, has had some longer tail of at least 20 years with deteriorating undeveloped markets’ borrow-ability and repayment-ability, which process could be connected to the weakening consumption in the most developed economies and the rising industrial capability of China, India, and e.g. that has undercut many undeveloped markets (i.e. countries) of manufacturing and exporting goods. As some of these countries are also heavily dependent on external financing from banks and investors, around 60-70 percent for Greece, Ireland and Portugal, a financing crisis becomes almost inevitable[44]. The return on the invested capital coming through WB and IMF funds for many countries has deteriorated, also The outflow of foreign capital from emerging and developing countries, with its destabilizing effect on private and public finances in these markets[45]. whereas the globalization has utilized energy and commodity prices rising constantly. Hence, the borrowed capital disappeared into covering previous debt, basic expenses, and corruption instead of prompting economic growth. The international financial institutions started lending on project-by-project basis that made no difference to the conclusions above. 

Even the ways of lending of the international financial institutions have practically changed, ideologically and conceptionally they have not evolved: the formal tightening budgets and close deficit observance are in practice as ever. Hence in a volatile and insecure marketplace is well reasonable. However, with the ongoing changes of realities* the role of the international financial institutions must change too by comprehending and accommodating these realities into regulatory and financial structures prompting market development and managing inflationary processes. From mostly being a lender and collector to mostly being a promoter and controller the international financial institutions should promote the rule of low in business and other Marketism’ utilities on the global marketplace, and thru lower lending rates to raise market noise and diversity.

Business Laws and Environmental Protection

Business regulations mostly used for environmental protection[46] should change into business laws apply indiscriminately and unconditionally. Moreover, formal firm growth improves with better enforcement as measured by fair and impartial courts, while informal firm growth is constrained by organized crime, pointing to their inability to take full advantage of the legal and judicial systems[47]. Hence, unless easing business laws in currently used system prompt economics growth the enhanced business laws would have the opposite effect under the Marketism prompting market noise and diverse business environment. When it comes to environmental protection[48], the effect by such change would have the most positive consequences of all. In a higher security market place in lower lending rates environment whereas governments and international organizations use subsidies and fiscal tools to boost market development through marginalizing market disadvantage for the SME&I the whole new market opportunities will appear… the individual imagination and creativity and the individual entrepreneurship would flourish. Things like consumer protection and environmental protection, the strict business laws e.g. would not prevent businesses and investors from expanding, but in the opposite will level-up competition creating more opportunities in high technologies and more market related education.

Conclusions

This paper may seem to optimistic and bordering unreality, however the possibilities that could come with rising market security on a global scale may go even further. The inclusion of Environmental Protection in the market competition as an market agent instead of the subsidized by the governments artificial part is a possibility, if not the only one that could save Earth from destruction. The system of Marketism is founded on free entrepreneurship and individual freedoms a natural Historical extension entailed into the best-succeeded economic systems of the past.  

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  1. 31.       Brzoza-Brzezina, Michat, Pascal Jacquinot, Marcin Kolasa CAN WE PREVENT BOOM-BUST CYCLES DURING EURO AREA ACCESSION? (WPS 1280) 2010

 

  1. 32.       Nabar, Malhar and Murtaza Syed, The Great Rebalancing Act: Can Investment Be a Lever in Asia

 

  1. 33.       De Broeck, Mark and Anastasia Guscina, Government Debt Issuance in the Euro Area: The Impact of the Financial Crisis, WP/1121

 

  1. 34.       Maslov, V.P. Economic law of increase of Kolmogorov complexity. Transition from financial crisis 2008 to the zero-order phase transition (social explosion), 2008 

 

  1. 35.       Mrkaic, Mico, Information Content of DQAF Indicators—Empirical Entropy Analysis, WP/10/204

 

  1. 36.       Singh, Manmohan and James Aitken, The (sizable) Role of Rehypothecation in the Shadow Banking System, WP/10/172

 

  1. 37.       Traum, Nora and Shu-Chun S. Yang, Monetary and Fiscal Policy Interactions in the Post-war U.S. WP/10/243

 

  1. 38.       OECD, 2009, “The Effectiveness and Scope of Fiscal Stimulus,” OECD Economic Outlook, Chapter 3, pp. 105-150.

 

  1. 39.       Aspachs-Bracons, Oriol and Pau Rabanal, The Effects of Housing Prices and Monetary Policy in a Currency Union,  WP/11/6

 

  1. 40.       Manasse, Paolo, Procyclical Fiscal Policy: Shocks, Rules, and Institutions—A View From MARS,WP/06/27

 

  1. 41.       N’Diaye, Papa, Countercyclical Macro Prudential Policies in a Supporting Role to Monetary Policy, WP/09/257

 

  1. 42.       Chami, Ralph, Dalia Hakura, and Peter Montiel, Remittances: An Automatic Output Stabilizer? WP/09/9

 

  1. 43.       Allen, Richard, The Challenge of Reforming Budgetary Institutions in Developing Countries WP/09/96

 

  1. 44.       Llaudes,  Ricardo, Ferhan Salman, and Mali Chivakul, The Impact of the Great Recession on Emerging Markets WP/10/237, 2010

 

  1. 45.       Ruggie, John Gerard International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order International Organization, Vol. 36, No. 2, International Regimes (Spring, 1982)

 

  1. 46.       Ruggie, John Gerard State Responsibilities to Regulate and Adjudicate Corporate Activities under the United Nations’ core Human Rights (12 February 2007)

 

  1. 47.       Ruggie, John Gerard, 2007 “Business and Human Rights: The Evolving International Agenda.” Corporate Social Responsibility Initiative, WP/31

 

  1. 48.       Rudrani Bhattacharya, Ila Patnaik and Ajay Shah “Monetary policy transmission in an emerging market setting”, January 2011.

 

  1. 49.       Sengupta, Rajdeep and Mara Faccio, Corporate Response to Distress: Evidence from the Asian Financial Crisis, Federal Reserve Bank of St. Louis Review, March/April 2011, 93(2), pp. 127-54

 

  1. 50.       Espinoza, Raphael and Abdelhak Senhadji, How Strong are Fiscal Multipliers in the GCC? An Empirical Investigation, 2011

 

  1. 51.       Anderson, Richard G.,Jane M. Binner  Vincent A. Schmidt,” Describing the Pass-through of Individual Goods Prices into Trend Inflation in the United States, Working Paper 2011

 

  1. 52.       Arslanalp, Serkan, Fabian Bornhorst, Sanjeev Gupta, and Elsa Sze, Public Capital and Growth, WP/10/175

 

  1. 53.       Contessi, Silvio, What Happens When Wal-Mart Comes to Your Country? Multinational Firms’ Entry, Productivity, and Inefficiency, 2010

 

  1. 54.       Shultz, George, William Simon and Walter Wriston. “Who Needs the IMF?” Wall Street Journal, February 3, 1998.

 

  1. 55.       Smith, Adam. The Wealth of Nations. Modern Library Edition. New York: Random House, 1937.

 

  1. 56.       Stiglitz, Joseph E. Globalization and Its Discontents. New York: W.W. Norton & Co., 2002.

 

  1. 57.       Bandyopadhyay, Subhayu and Suryadipta Roy “Political Economy Determinants of Non-agricultural Trade Policy,Federal Reserve Bank of St. Louis Review, March/April 2011

 

  1. 58.       Aruoba, S. Boragan, Francis X. Diebold, M. Ayhan Kose, and Terrones Marco E. Globalization, the BusinessCycle, and Macroeconomic Monitoring”, WP/11/25

 

  1. 59.       Schnaiberg, Allan.. The Environment: From Surplus to Scarcity. New YorkOxford University Press. ISBN: 019502611X, 1980

 

  1. 60.       Schnaiberg, Allan and Kenneth A. Gould. 1994. Environment and Society: The Enduring Conflict.New York: St. Martin’s Press. ISBN: 0312102666

 

  1. 61.       Scandizzo, Stefania, Intellectual Property Rights and International R&D Competition, WP/01/81

 

  1. 62.       Watt, Stanley, Firm Heterogeneity and Weak Intellectual Property Rights, WP/07/161

 

  1. 63.       Bayoumi, Tamim and Trung Bui Deconstructing the International Business Cycle: Why does a U.S. sneeze give the rest of the world a cold?, WP/10/239, October 2010

 

  1. 64.       Tressel, Thierry, Financial Contagion through Bank Deleveraging: Stylized Facts and Simulations Applied to the Financial Crisis, WP/10/236

 

  1. 65.       The Business Cycle Dating Committee of the National Bureau of Economic Research, the committee determined that a trough in business activity occurred in the U.S. economy in June 2009 the end of the recession, CAMBRIDGE September 20, 2010

 

  1. 66.       Choi, Woon Gyu and Yi Wen 1, Dissecting Taylor Rules in a Structural VAR, WP/10/20
  2. 67.       Saez, Emmanuel Striking it Richer: The Evolution of Top Incomes in the United StatesJanuary 23, 2013
  3. 68.    Khanna, Ro Entrepreneurial Nation: Why Manufacturing is Still Key to America’s Future 2013[1]
  4. 69.    Reinhart, Carmen and Rogoff, Kenneth “Growth in a Time of Debt” (GITD hereafter)  2009

 

 


[1] Tressel 2010

[2] Saez 2013: From 2009 to 2011, average real income per family grew modestly by 1.7% (Table 1) but the gains were very uneven. Top 1% incomes grew  by 11.2% while bottom 99% incomes shrunk by 0.4%.

[3] Konov 2011

[4] Konov 2011

[5] Bayoumi and Bui, WP/10/239

[6] Konov 2011

[7] Spence 2011

[8] Konov 2011:  the three main market facts: 1) the ongoing globalization; 2) the rising productivity; 3) the environmental pollution and exhausting Earth resources have major exogenous and endogenous casual effect on the real markets of the Advanced Market (AM) and Emerging Markets (EM) alike. (China is not included as an EM)

[9] Khanna 2013: There is no doubt that America’s manufacturing base has declined, peaking at 19.6 million jobs in 1979 and now at just over 11 million jobs. Despite this economic transition, however, U.S. manufacturing jobs are still worth having. On average, full-time manufacturing work pays 20 percent more than full-time service-sector jobs.

[10] Table 1

[11] Konov 2011

[12] Babecky, and others WP/10/198

[13] Friedman 2013: There is no doubt our economy is primarily being held back by the deleveraging and drop in demand that resulted from the 2008 financial crisis.

[14] Krugman. Paul Data, Stimulus, and Human Nature NYT 2013 That said, if you look at players in the macro debate who would not face huge personal and/or political penalties for admitting that they were wrong, you actually do see data having a considerable impact. Most notably, the IMF has responded to the actual experience of austerity by conceding that it was probably underestimating fiscal multipliers by a factor of about 3.

[15] Traum and Yang, WP/10/243

[16] Tressel WP/10/236

[17] del Granado and others WP/10/234

[18] Tom Bingham, Lord Chief Justice 1996-2008, presents eight parts of the rule of law: The law must be accessible and so far as possible intelligible, clear and predictable. Questions of legal right and liability should ordinarily be resolved by application of the law and not the exercise of discretion. Laws should apply equally to all, unless objective differences justify differentiation. 

[19] strategies to mitigate  the impact of climate change will vary by line of business, solvency-related risks remain central to all insurers and lines of business. As such, the threat that climate-change-driven weather-related risks pose to insurer solvency is of universal concern for insurance regulators, especially considering that insurer financial stability is heavily dependent on its investment portfolio. So it is imperative we examine how climate change will impact the investments insurers hold and establish applicable regulatory standards for the investment practices of insurers.

[20] Maslov 2008

[21] Konov 2011

[22] A measure of the disorder or randomness in a closed system. The most general interpretation of entropy is as a measure of our uncertainty about a system. The equilibrium state of a system maximizes the entropy because we have lost all information about the initial conditions except for the conserved variables; maximizing the entropy maximizes our ignorance about the details of the system.[18] This uncertainty is not of the everyday subjective kind, but rather the uncertainty inherent to the experimental method and interpretative model.

[23] Law firm of Fried, Frank, Harris, Shriver & Jacobson LLP 2007

[24] Dabla-Norris and Inchauste WP/07/112

[25] Akitoby and others WP/04/20

[26] Wells and others 2007

[27] Man, Senior International Law Advisor International Institute for Sustainable Development 2008

[28] Ruggie 2007

[29] Watt 2011

[30] Espinoza 2011

[31] Arslanalp 2010

[32] Tressel 2010

[33] Contessi  2010

[34] Anderson 2011

[35] Bhattacharya 2011

[36] Bayoumi 2011

[37] Stiglitz 2002

[38] Bandyopadhyay 2011

[39] Boragan and others 2011

[40] Reinhart and Rogoff 2009: have recently engaged in a prodigious research effort aimed at collecting and analyzing economic data and financial crises across dozens of countries and hundreds of years. The most comprehensive repository of this work is their 2009 book This Time is Different: Eight Centuries of Financial Folly; a separate report “Growth in a Time of Debt” (GITD hereafter), based on a subset of their data on national debt and economic growth, has received considerable attention in the media and among policy makers after professor Reinhart testified at the National Commission on Fiscal Responsibility and Reform.

[41] Shultz 1998

[42] Smith 1937

[43] Combes and others WP/1109

[44] Konov 2011

[45] Chami and others WP/09/91  

[46] Schnaiberg 1980

[47] Dabla-Norris and Inchauste WP/07/112

[48] Schnaiberg and Gould 1994

Market (i.e. Economy’s) Equity of Market Economics (i.e. Marketism)


Market Equity[1] is the value built in assets[2] by the level of market development. Market Equity (i.e. Eq) decreases with rising Lending Interest Rate (i.e. LIR), whereas Market Entropy increases with rising Lending Interest Rate (i.e. LIR).

http://www.scribd.com/doc/131635795/Market-i-e-Economy%E2%80%99s-Equity-of-Market-Economics-i-e-Marketism

 

 

Market (i.e. economy’s) entropy of Market Economics (i.e. Marketism)


Market (i.e. economy’s) entropy of Market Economics (i.e. Marketism)

 

The technological improvements in manufacturing, international trade and communications i.e. rapid Globalization and rising Productivity have established global market (i.e. economic) allowances for expanding business activities into not-necessary-industrial related market sectors without prompting Inflation (called by the Marketism – “market entropy”). The entropy is unpredictable business activities succeeded in a market (i.e. economy), which could be invoked by “natural” to the market competition agents i.e. businesses and investors, or “artificial” to the market competition i.e. governmental interventions, or a combination of both. However, if mostly artificial to a market (i.e. economic) competition market tools are used the possibilities for market redundancies or shortages and therefore market volatility and instability if high entropy is achieved is probable, e.g. the governments’ ineptness in handling market (i.e. economy) is well observed. The probabilities for governmentally run economies to bring market distortion are high. However, the trickle-down economics of the a priory Capitalism has exhausted its strength to spur enough business activity for supporting adequate market development (i.e. economic growth) for employment and fiscal reserves. The transnational corporations and big investors are favored by the “shady” business laws and practices, fiscal brakes, lack of international transparency, weak intellectual property laws, e.g. whereas they cannot prompt and maintain enough business to respond to the global demand for such. The appointed globalization and productivity growth in combination with the China’s industrialization has tipped off the market possibilities for the expansion of manufacturing internationally to the point needed to prompt and maintain global development: the productivity and investment considered as the only market (i.e. economic) carriers for global development under this current condition underperforms greatly. Moreover, the Earth pollution and exhaustion of resources are two factors that additionally load the system because of the necessities for quite expensive environmental protection and the rising natural resources prices. Thus becomes natural for the governments to get involved in markets (i.e. economies) by using stimulus packages, keeping low interest rates, pouring liquidity, e.g. and unorthodox tools such as quantitative easing all in prevention from total economic breakup  or to prompt business activity, low rate lending and subsidies to promote environmental protection. However, the pinned to a tight-budget politicized economics of oligopolies and monopolistic competition has weak transmissionability to the bottom market that the real business activity is needed to balance the market demand in natural for the market competition. The Small and Medium Enterprises & Investors (SME&I) are those that could enhance and diversify such business activity into unpredictable and uncontrollable directions, i.e. entropy, but the unfair market competition does not allow SME&I natural for the market expansion: the shady business environment is weakening the market security.

Named after Boltzmann’s H-theorem, Shannon denoted the entropy H of a discrete random variable X with possible values {x1, …, xn} and probability mass function P(X) as,

 H(X)=E[I(X)]=E[-ln(P(X))]

Here E is the expected value operator, and I is the information content of X.[8][9] I(X) is itself a random variable.

Joshua Ioji Konov, 2013

Enhancing Markets (i.e. Economies) Transmissionability to Optimize Monetary Policies’ Effect


Enhancing Markets (i.e. Economies) Transmissionability to Optimize Monetary Policies’ Effect

Joshua Ioji Konov*

January 26, 2013

*Chicago IL, the USA

Joshua.konov@gmail.com

Abstract

Monetary Policies of expanding liquidity through bottom low interest rate; stimulus packages, quantitative easing, etc should be transmissible to the entire market (i.e. economy) for best performance. However, current markets (i.e. economies) do not posses enough market security to provide the transmissionability to reach adequate market development (i.e. economic growth). This paper theoreticizes that by marginalizing the shady business practices of vague personal corporate liability and contract laws, vague insurance and bonding laws, inadequate intellectual property laws, environmental protection and consumer protection laws, etc will enhance the market security, and will improve the transmissionability and the effectiveness of the Monetary Policies to boost market development (i.e. economic growth).

 

In Addition

Market Economics Research concludes of few papers, which adapt an exploratory method more logical and philosophical than detailed; however, its conclusions are in detailed comprehension. It is innovative but realistic, which ideas have been concluded by economists such as Paul Krugman, Michael Spence, and Joseph E. Stiglitz among others, who recognize the inadequate economic approaches under the modern day globalization that bring high unemployment & national debt. The innovation that separates this research from many others concludes its reliance on free entrepreneurship as a main motor for economic development. It (this research) moves the weight along the big business & investors to the small and medium businesses & investors as main economic agents. Instead of more governmental economic interference as Mr. Krugman and Mr. Stiglitz suggest or more protectionism as Mr. Spencer suggest to solving globalization related issues this research recommends more robust business environment as a markets related approach.

This paper is based on two previous papers* and Bibliography.

*1. Joshua Ioji Konov / JK, 2011. 2001 & 2007 Recessions prompted remaking of the international organizations,” MPRA Paper 34588, University Library of Munich, Germany.

   2. Joshua Ioji Konov/ JK, 2011. Piercing the Veil’s Effect on Corporate Human Rights Violations & International Corporate Crime (Human Trafficking, Slavery, etc),” MPRA Paper 35714, University Library of Munich, Germany.

However, it explains and adds the theory from a new prospective

REFERENCES

1. Konov, Joshua Ioji / JK, 2011. 2001 & 2007 Recessions prompted remaking of the international organizations,” MPRA Paper 34588, University Library of Munich, Germany.

 

2. Konov, Joshua Ioji / JK, 2011. Piercing the Veil’s Effect on Corporate Human Rights Violations & International Corporate Crime (Human Trafficking, Slavery, etc),” MPRA Paper 35714, University Library of Munich, Germany.

 

3. Anderson, Kym, The Challenge of Reducing Subsidies and Trade Barriers, CENTRE FOR INTERNATIONAL ECONOMIC STUDIES, Discussion Paper No. 0412, 2004

 

4. Cowling, Kith & Poolsombat, Rattanasuda & Tomlinson, Philip ”Advertising and labour supply: why do Americans work such long hours?  International Review of Applied Economics, Taylor and Francis Journals, vol. 25(3), p. 51 2011

 

5. Kumhof, Michael & Benes, Jaromir, 2011. “Risky Bank Lending and Optimal Capital   Adequacy Regulation,” IMF Working Papers 11/130, International Monetary Fund.

 

6. Bair, Sheila C.  “Bull By the Horns: Fighting to Save Main Street From Wall Street and Wall Street From Itself,” 2012

 

7. Hicks, John (1939). “The Foundations of Welfare Economics”. Economic Journal (The Economic Journal, Vol. 49, No. 196) 49 (196):  696712. doi:10.2307/2225023JSTOR 

 

8. Kaldor, Nicholas (1939). “Welfare Propositions in Economics and Interpersonal Comparisons of Utility”. Economic Journal (The Economic Journal, Vol. 49, No. 195) 49 (195): 549–552.doi:10.2307/2224835JSTOR 2224835.

 

9. Villemeur, Billette de, Etienne; Flochel, Laurent and Versaevel, Bruno  Optimal collusion with limited liability, Unpublished, 2012

 

10. Pareto, Vilfredo, In Talcott Parsons, Theories of Society; Foundations of Modern Sociological Theory, 2 Vol., The Free Press of Glencoe, Inc., 1961

 

11. Zhang, Tao , Heng-fu Zou, The growth impact of intersectoral and intergovernmental allocation of public expenditure: With applications to China and India, Volume 12, Issue 1, Spring 2001, Pages 58–81

 

12. Cashin, P., “Government Spending, Taxes, and Economic Growth”, IMF Staff Papers, 1995

 

13. Hagen, Jürgen von, Government Spending and Growth Notes for Presentation at the ECB Public Finance Workshop by University of Bonn, Indiana University Kelley School of Business, and CEPR December 6, 2007

 

14. Bleaney, Michael, Gemmell, Norman, Kneller, Richard,   Testing the endogenous growth model: public expenditure, taxation, and growth over the long run, Canadian Journal of Economics, 34,  2001

 

15. Utton, M.A., The Political Economy of Big Business, p. 186, Oxford 1982

 

16. Ormerod, Paul, The Death of Economics, p. 55. 1995

 

17. Sawyer, Malcolm C., The Economics of Industries and Firms, p. 35, 1981

18. Sawyer, Op. Cit., p. 108

 

19. Lazonick, William, Business Organisation and the Myth of the Market Economy, pp. 86-87, 1991

 

20. DuBoff, Richard B, U.S. Hegemony: Continuing Decline, Enduring Danger”,

Monthly Review , December 2003.

 

21. Maslov, Alexander and Ivanchenko, Igor (2011): Money Field Theory: in Pursuit of Formalism. Published in: International Journal of Humanities and Social Science , Vol. 1, No. 8 (July 2011): pp. 19-29.

 

22. Beder, Sharon, ‘Economy and environment: competitors or partners?’Pacific Ecologist 3, Spring 2002, pp. 50-56.

 

23.Commonwealth Government, Ecologically Sustainable Development: A Commonwealth Discussion Paper, AGPS, Canberra. 1990

 

24. Spence, Michael, “The Impact of Globalization on Income and Unemployment,” July/August 2011

 

25. Katz, Richard 2012**, TROUBLE ON THE HOME FRONT, Foreign Affairs, 2 March 2012

 

26. Ukpere, Wilfred I., Globalisation and the challenges of unemployment,

income inequality and poverty in Africa, African Journal of Business Management Vol. 5(15), pp. 6072-6084, 4 August, 2011 

 

Table 1                    Table 2                            Table 3                              

  

How Globalization affects Equity


How Globalization affects Equity   

Joshua Konov 2010

In times of Globalization some economies and markets build equity, however some not only cannot use their equity to improve their standard of living but lose their equity to lack of business that provokes deterioration of equity or at least discount of equity.

Equity is in the foundation of the economy and the market: in the past most of the equity consisted to physical property but gradually more intellectual property and subjective market securities have become equity. Thus when individual or corporate equity is evaluated plus the physical equity if any the intellectual property, the hold securities and the projected economic growth are considered equity. The trend toward intellectual property and market valued securities instead of physical equity is more than obvious for private and corporate equity equally. However, private equity for the majority in the world consists of physical property equity when intellectual and market securities equity is more possessed by very wealthy individuals and individuals living in the most developed economies.

There is direct correlation between market individual income and equity value, because equity value reflects general market value of a property which relates income financial statement. A property value supported by higher income statement is higher than a property value supported by lower income financial statement. In some cases -as it happened before the last Great Recession- market property value became uncontrollable prompted by pure speculations and compromised lending practices. Consequently the exasperation of property value burst bringing financial losses and lost of properties to many. Seemingly equity of property values should well reflect the real market property values which reflect general income level in this market. Talking about equity not related to physical property but could be intellectual property, market security, or projected economic growth with very high subjectivity in the real economy the market value of such equity is more related to security of intellectual property, market securities and certainty of projected economic growth. Factors that directly affect these equity are scrutinized historical development of the market, most recent economic indicators showing the direction of this market and consistent indicators of the direction of proximal development, factors that indirectly affect these equity are the level of real acting rule of law and contracting laws of such market, the clarity and accountability of the marketplace and trading exchanges, the clarity and accountability of intellectual property laws, and the level of personal liability of the risk management of corporate structures, the fiscal stability and the respective infrastructural maintenance and improvement, and social and medical security in this market.

Globalization has invoked the need for individual markets of using Social and Infrastructural expanses for balancing “demand-to-supply” when in the past these expenses were functioning as stoppers toward economic growth because the overall productivity was lower and there were many closed for globalization markets, now the conditions are changing the productivity is rising constantly and the almost all markets are eager to globalize. Other major changes at the moment are the China’s entering WTO and the global competition and the consistent economic growth for the last 20 years China has succeeded. By attracting the majority of global investment and by becoming economy to which outsourcing and new startup manufacturing China become the industrial power that might well tip-off “supply-to-demand” into “demand-to-supply” market configuration; such processes shorten already shortening employment in manufacturing to the rest of the world. Manufacturing, industrial production could well be considered in the foundation of the modern Capitalism that adds the most to fiscal reserves of most of global economies by highly paid employment; the most advantageous return of investment and the most secure buildup of equity: the higher growth of industrial production the higher level of equity value.

The Most Developed Economies are considered the Most Industrialized Economies.

In such market environment of Globalization (outsourcing and moving industrial production to less expensive economies) and rising Productivity (improvements in high technologies and shrinking employment marketplace cause this rising productivity) industrial employment is shrinking fast at US. Very few are the economies of Most Developed ones that have succeeded under current forces of industrial competition to sustain industrial production and keep up their industrial leadership: Germany and Japan are the few. The value of equity as stated closely relates industrial production of the modern day economics therefore overall such value will deteriorate in markets with deteriorating industrial production.

Modern economics does not take in consideration the value of already succeeded equity if economic industrial economic growth is not maintained and only short term self-adjustments are project-able. Such positions of equity directly relate the financial system of individual markets and the global financial system which lends on relatively high interest rates and short term, and in which corporate structures are run on short term profitability. Indeed equity related intellectual property and equity related market security are long term corporate equity however the fluctuations of overall market equity value often fluctuate and reflects corporate equity values violently.

In the past when supply was leading and most developed countries were firmly holding onto the global industrial production such fluctuations of individual and corporate equity values were productive because of prompting concentration of capital than prompting consecutive economic growth, then also less developed economies were more like satellites to the most developed ones being able to support fiscal reserves for social and infrastructural expenses. Even some parts of such industrial production was developed here and there in different countries the majority was still kept by the most industrialized economies. The equity values in most industrialized markets were therefore higher than these of in less developed markets and these still are, except that under the new arousing conditions of globalization and rising productivity industrial production has been gradually moved and outsourced to China, and now India, Brazil and Vietnam which are vastly populated countries with inexpensive labor force and some good industrial structures, therefore in terms of value of equity related industrial production the most definitive becomes the issue of lack of such industrial production to many economies and if such is reduced or lost what consequently would be their value of equity. Intellectual property and market security values are much more flexible and adaptive than the real estate equity value because intellectual property and market security equity reflects an economy, country, marketplace achievements in education, social and infrastructural development that requires long term development thus countries as US that very well represents such succeeded development will be hard to be shut away as holders of such equities. However such superiority is a short term prospective even to the mighty US because of the Internet and the constant exchange of information and technologies, because of the outsourcing and moving industrial production the new emerging economies would pop-up if these themselves develop required infrastructure, social structures, and education to respond to the changing realities. In case of China when in the past its communist social policies were counter productive to its industrial growth and development under the most recent globalization and rising productivity China’s Social and Infrastructural expenses proved to be very productive in balancing its “demand-to-supply” and thus succeeding consistent economic growth even when the rest of the world went through the Great Recession, thus China’s equity has risen much because of its economic growth.

Equity values are very sensitive economic indicators more like currencies; the difference between them is that currencies’ values are more related to short term global adjustments and fluctuations when equity works in longer terms. Equity values are harder to built: real estate, infrastructure, intellectual property, market security equity values are to be used in the future as economic indicators for a country, economy, market evaluation and underwriting. To use equity values, economics must change the ways these values are preserved and enhanced even when industrial production is not going to be the main economic indicator as it has been for some time. Economic “tools” are to be used to sustain equity values in a “as it comes: as it goes” basis and approach, that approach differs from country, economy, market to country, economy, market because of their level of development, mentality and tradition. In some Social and Infrastructural expanses should be reduced in short term to prompt economic development in some the Social and Infrastructural expenses should be well enhanced to prompt such economic development. There are some economic “tools” that are for all and these are the expanses for preventing pollution and implementing renewable energies, these are economic “tools” for balancing “demand-to-supply” on a global scale and are to be financed by the global financial structures of the World Bank, IMF and WTO through Commercial Banks on a marginal interest rate or subsidies. For such lending paramount should be the enhancement of businesses security: of business and contracting laws, of personal liability to corporate structures, of corporate bonding. The global financial structures should be given the controlling functions over global balance of “demand-to-supply” to prevent from inflation, the issuing of monetary quantities power to keep interest rates low, the targeting countries, economies, markets weak points for building equity, the controlling over countries, economies, markets compliance with the guidelines and underwriting, the controlling over commercial banks’ execution of these guidelines and underwriting matrix.

The existing equity of countries, economies, markets should be the foundations for low interest lending therefore overall security should be enhanced thus countries, economies, markets could become eligible for financing.

In the new century of market economics industrial production should not be the only way for fiscal reserves but ones equity that could be built by properly balancing its “possible demand-to-supply” and properly and pragmatically using all economic “tools” to raise its “security”.

  • China’s Barbie Doll EconomicsOft-quoted, Dong Tao, a heavyweight economist at UBS in Hong Kong, once said: “A Barbie doll costs $20, but China only gets about 35 cents of that.” He was talking about global trade statistics at the time, but that proclamation might help explain why Chinese companies are increasingly shopping for and successfully acquiring storied brands, most recently, Ford’s Volvo.The lesson: the big money is in owning the brand, not just making it for foreign companies, writes the AP’s William Foreman.
  • Great exportations “China overtakes Germany to become the biggest exporter of all” “CHINA’S rise has long appeared inexorable. Despite a decline in total world trade, China has seen its exports fall less than those of other big powers. A new report by the World Trade Organisation calculates that the total value of merchandise exports fell by a staggering 23% in 2009. Among the top ten exporters, Japan’s shipments were worst affected (falling by 26%). Although China’s exports also fell (by 16%), the contraction was less painful than in Germany (down by 22%). As a result China is now the single largest exporter. The global downturn has helped to reduce global imbalances; the leading three exporters accounted for 26.7% of total world exports in 2009 down from a third of the total in 2008. The WTO expects trade to rebound by nearly 10% this year.”
  • The Real Reason China Resists on the RMB“As I see it, China is asking a question to which there is no easy answer; what right does the US have to lecture anyone on economic matters now, having played so large a part in causing the current global recession through loose monetary policy, poor risk management by some of our most prestigious companies and monumental regulatory failures? They are responding to the continued US belief in American exceptionalism, that we can do whatever we do, right or wrong, and ignore the criticisms and demands of other countries who often bear the consequences of our actions, while we continue to insist on our right to criticize and make demands on them. As Brad Delong and Stephen Cohen have pointed out, the US simply no longer has the economic clout to get away with this any longer, and who better than China to stand up to it?
Capacity (Equity) building as a China’s National Policies is a balance between Free Enterprises rising Productivity and Social and Fiscal Policies and Infrastructure
Equity, capacity and sustainability “The concept of equity in the context of capacity building is not sheer ethical. It”s mixed with certain practical social and economic meaning, therefore inseparable from sustainability.Equity here contains three folds of meanings: 1) equity between existing generation and future generations; 2) Equity between different social members under the same generation; and 3) Equity in responsibility and obligation that different social members or groups have to achieve sustainable development. Equity between generations, to much extent, is subject to ethical area. The current generation, in moral sense, should avoid “eat rice from ancestors while break future generations”pot”. They have no right to overconsume and damage natural environment and resources that the future generations will live in. This point was made very clear in the World Committee on Environment and Development Report. In its definition of sustainable development, that not to harm the future generations to meet the need of their own was established as a condition. Although capacity building of the current generation is helpful to equity between generations, this equity however is not the most important problem to solve in the area of capacity building. The equity between different social members under the same generation is closer related to sustainability. On the one hand, from the perspective of social justice, it”s necessary that the society takes into consideration the poor’s interests so as to reduce the gap between the rich and the poor. This was emphasized in the Brundland Report. That is, The basic needs of the poor in the world should be put at the top priority. On the other hand, equity between different social members under the same generation is also a condition to sustainable development. It seems that there is not much connection between equity and sustainability, or not so direct. However by some analysis, can you find that different social members”unequally possession of the resources is an important reason for difficult sustainable development.This is because that even though the society in general is rich in resources averagely speaking, yet the gap in term of resources possession will force the social members short of resources to overuse or abuse their limited resources to make a living. Since the environmental problems are interrelated and intereffected, some part of unsustainability in the society will likely lead to an overall sustainability. Therefore, equity is also a condition to the sustainable development process. Sustainable environment and equity of social responsibility and obligation have been an issue that developed countries and developing countries keep debating on. Who has polluted the environment? Who is making the environment worse and worse? This is an issue of responsibility and obligation. Even though it”s an issue of equity between different social members or groups under the same generation, in essence, it”s a practical issue in international politics and economics. However, even if every social member or group is willing to assume the obligation, does he have the capacity to realize the commitment? There you find that equity, capacity and sustainability are closely related with one and another.”
State Employment is used as a balance for higher wages in Non State Employment instead of used by the Economics of Capitalism (mostly and only) Employment Market Forces.
Ⅲ. The Institutional Transition Under the Dual Labor Market From our analysis of the features of employment absorption and wage determination in the two parallel urban labor markets we can make the judgment that the labor market in the newly established sector determined by market forces represent the future direction of development. In other words,the process of transformation from the SOE”s employment system to NES”s is the process of the formation of the labor and wage system of the market economy. How will this system transition take place? Since the two systems of labor and wage in the two kinds of sectors dominate their respective labor market, the competition for laborers between these two kinds of enterprises and therefore the expansion of one labor market and the reducement of another will realize the transition from one system to another. This is the first form that the transition of employment system will take. In the process of expansion and reducements of the two labor markets, caused by the competition between the two kinds of enterprises, the traditional system of the state sector will respond accordingly, namely by introducing reform in order to survive in the competition and shift to a market economy. In this way the second form of system transition takes place. First, we will look into how the first system transition that is characterized by employment transfers between the two kinds of enterprises occurs and the features of its transformation. If we suppose the urban labor market is closed off for outsiders, laborers are distributed merely between the SOEs and NESs. Chart 1 indicates the competitive relations between these two sectors as well as the process of expansion and reducement of the two labor markets.The horizontal axis stands for the labor volume. From O1 to the right, the labor volume of the SOEs can be measured; from O2 to the left that of the NESs can be measured. The domain between O1 and O2stands for total supply of labor. The vertical axis stands for the marginal productivity of labors or the wage level. The curve tilting downwards from the right to the left is the curve of marginal productivity of labors in the NESs. It tilts because their marginal productivity of labors decreases with the increase of the employed labor”s size. At the same time, the marginal productivity of labors in the SOEs increases with the number of workers leaving their enterprises.Thus, the curve tilting downwards from the left to the right is the curve of marginal productivity of labors in the SOEs. The curve that is steeper, is the curve of marginal productivity of labors in the SOEs under the assumption that their wage level is determined by the market (see name in quotation marks). In this situation, this curve intersects at the point A with the curve of the marginal productivity of labors of NESs during their employed labor volume expansion. This means the wage level of the two kinds of enterprises are equal to the point Wa, and the expansion of labors”volume in NESs no longer continues. Then the labor”s volume in the SOEs is O1A while that of NESs is AO2. Since the SOEs are overstaffed and wage is not determined by the marginal productivity of labors, however, their curve of marginal productivity should be more flat (might be a horizontal beeline without elasticity), i. e. the curve whose name is without quotation marks that intersects at the point B with the curve of the marginal productivity of labors in the NESs. It is at this point that NESs stop expanding their labor volume, here the wage rate is Wb. As the wage is determined institutionally NESs need to pay higher wage to attract laborers; and the transformation of the laborers from the SOEs to NESs becomes smaller. In the real laborer”s distribution, the laborer”s volume employed by the SOEs is O1B instead of O1A, that for newly established enterprises is BO2 instead of AO2. So the NESs are limited by their ability to pay higher wage, the difference between labor volume they really employ and that they should employ is indicated by the distance between A and B in the chart. Chart 1 Labor Transfers between Two Sectors Our theoretical analysis reflect the reality of transformation of laborers between the two sectors. One characteristic of NESs is very labor intense. It is not feasible for NESs to pay very high wage to attract employees from SOEs if NESs are to keep their advantage in laborer”s resource. So competition of employment is limited by the scope of their ability to pay high wages. Within this scope, however, NESs can certainly attract relatively high qualified workers to form the backbone of their enterprises without taking cost into account. As it is not possible for the NESs to obtain all the laborers they need from the state sector it is necessary to have other channels to find labor. If NESs had not have other such channels, this sector would not have been able to develop to the present stage. Our analysis above was made under the assumption that the urban labor market was closed off for outsiders, in our further analysis we will give up this assumption. NESs obtain highly qualified workers from the SOEs by paying higher wage in order to satisfy their needs for technology. The other source is laborers with common skills from the rural areas.
China has discovered that globalization and international competition work in its favour.
The problem of the Rest of the World is the ideological almost blind following of Marx’s’ “Das Kapital” financial system controlled by the rules of “trickle-down” Capitalism that happen to be quite impractical even when this system built North Americas, Great Britain, France and Germany: Great Powers envied by anyone in the World, however looking in History things sometime have to change; it happened to Rome, Persia, Victorian Empires, and etc., thus change could be considered as ongoing now affecting different countries and markets in different ways, but the trend is quite similar ( In the World short term history: once mostly agriculturally driven GDP changed into mostly industrial production driven GDP, now it is about to change into mostly “artificially” balanced “Demand-to-Supply” Market Economics GDP not the ideological one followed as a mantra by the west, however if global economy does not adapt to the new upcoming with the globalization challenges very hurtful consequences may occur).
Joshua Konov 2010

 

Strategies for Sustainability of Environmental & Resources Efficiency


ast.  

Strategies for Sustainability of Environmental & Resources Efficiency

Joshua Ioji Konov* October 4, 2012

*ChicagoIL, the USA Joshua.konov@gmail.com

Abstract

The best model for expanding Alternative Energies and Environmental Protection globally is through using market equilibrium, whereas governmental subsidies and fiscal stimulus to be just supplementary. Market equilibrium depends of matching consumption demand and supply under price deleveraging that could be achieved only by changing market (i.e. economic) agents from presently used trickle-down economics that stimulate big business and big investors to a more market related economics (Marketism) that would stimulate Small & Medium Businesses and Investors (SME&I) boost business activities and related employment, fiscal reserves and over all market utilized consumption.

This paper is based on two previous papers** and Bibliography.

**1. Joshua Ioji Konov / JK, 2011.2001 & 2007 Recessions prompted remaking of the international organizations,” MPRA Paper 34588, University Library of Munich, Germany.

   2. Joshua Ioji Konov/ JK, 2011.Piercing the Veil’s Effect on Corporate Human Rights Violations & International Corporate Crime (Human Trafficking, Slavery, etc),” MPRA Paper 35714, University Library of Munich, Germany.

However, it explains and adds the theory from a new prospective

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2. Konov, Joshua Ioji / JK, 2011. “Piercing the Veil’s Effect on Corporate Human Rights Violations & International Corporate Crime (Human Trafficking, Slavery, etc),” MPRA Paper 35714, University Library of Munich, Germany.

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Table 1(FRED)

Image

 

How Economic Changes can boost US Economy and save Free Entrepreneurship


How Economic Changes can boost US Economy and save Free Entrepreneurship

Under the brand new global market conditions

  • of rapid market (i.e. of economy, economies) globalization and rising productivity;
  • of China’s industrial growth;
  • of improving technologies in manufacturing and the Internet;
  • of colossal size transnational corporations;
  • of Vietnam, India, Brazil, and e.g.;

the theory of Market Equilibrium, Philips Curve, Productivity Effect^, Starving the Beast, Frontier Economics^^ the Frontier Thesis^^^ and many other theories of economics, sociology or politics do not  explain comprehensively the needed changes that could prompt under these new conditions the US economy into longer term market development (i.e. economic growth). The 2007-9 Recession with its deep global equity reduction effect and the post recession sluggish rebound is a good example for how dysfunctional modern day economics is where it comes to predicting and countering the effect such upheaval had on the US and many other economies. The WTO, WB and IMF and the entire international financial system, which was suppose to prevent the spreading of economic decline in production and capital failed to do it.

The monetary, stimulus packages, quantitative easing, and e.g. measures taken and being in process by the US, Japan, and China were counter-cyclical by nature far beyond Keynesian theories or even farther the rigid Austrian Economics so much practiced. Moreover, these have been acts of desperation pressured by the real market forces, however the governments helped save the global market from total collapse, whereas the ideological in its nature science of economics has been predicting inflation and doomed dollar that never materialized. Only the European Union continued following the ideological postulates, and the results has been catastrophic, indeed. Throughout this time, the US, Japanese and Chinese governments have been taking over business functions by physically buying share of companies, by giving easy money to different sections of the markets, and by interfering with the market balance (i.e. equilibrium). Many forms of wealth distribution have been implemented too. It has become obvious for the governments to save the market is necessary to raise demand and to help large financial institutions get rid of their evaporated equity, thus lending could be ignited, so the government acted for which high appreciation to President Obama and his decisive approaches.

However, what the US and other governments have been doing by direct market interference should be supplemented and extended into long-term economic program to boost the market share of Small & Medium Size Businesses and Investors (SME&I) bringing them to the front-line as market agents.

The market transmission-ability, whereas large sums of liquidity have been injected into the market through QE and other ways, is a paramount issue needing immediate solution; the options are two either the government takes bigger role in the overall business activities, or the SME&I are given such, thus the choice is between the inept governmental market interference or the market forces and competition to prompt a long-term market development. It is clear who should be doing it: the SME&I, but for them to do it the overall Market Security should be enhanced to raise SME&I’ lower-rate borrow-ability; through changes and enhancements of the intellectual property protection, the contract laws, the insurance and bonding provisions, of the corporate governing bodies personal liability laws, e.g. (http://bx.businessweek.com/market-economy/)

^Australian Economic Papers, Vol. 48, Issue 2, pp. 105-123, June 2009
^^http://www.frontier-economics.com/_library/publications/frontier%20bulletin%20-%20closing%20loopholes.pdf
^^^by historian Frederick Jackson Turner in 1893

that will raise the Market Security and bring the related relative Market Competition Equilibrium in favor of SME&I.

The overall globalization and rising productivity that brought deindustrialization of many developed markets followed by high unemployment and declining middle class and fiscal reserves could be positive to these markets if diverse business activities expands; the Productivity approach (only) cannot keep up with these new global market developments, therefore more diversified business environment is needed to boost employment, whereas the Inflation/Deflation are the main indicators for Market Balance (Equilibrium).

The R&D and Better Education are equally important, however, diverse market activities will expand overall capital and bring more opportunities for connecting R&D and Education to the real markets.

The Social and Infrastructural Expanses under these new conditions will become more equitable thus equally been used for Market Balance, however their Market Share should be limited to additives whereas the free Market Completion should be considered for primary market agent.

To comprehend the market possibilities such approach a detail and comprehensive research (http://joshuakonov.wordpress.com/) of should be taken in consideration.

On the question, can the US economy succeed and maintain long-term Market Development under these new global market conditions? The answer is definitely yes, because in the equity based new arriving global economics the well developed and with high equity flexible US market/economy could be a leader; however, the revolution of prioritizing SME&I role should be implemented.

2011

  1. 2001 & 2007 Recessions prompted remaking of the international organizations
    MPRA Paper, University Library of Munich, Germany View citations (1)
  2. Piercing the Veil’s Effect on Corporate Human Rights Violations & International Corporate Crime (Human Trafficking, Slavery, etc)
    MPRA Paper, University Library of Munich, Germany

Joshua Ioji Konov, 2012

 

 

 

Philosophy of a Governing Economy


THURSDAY, MAY 27, 2010

Philosophy of a Governing Economy

In contrast to the US economic policies China uses much more decisively economictools when a situation arises. In many cases when either Global economic crises was on its ways as it happen in 2008-2009 or now when Chinese economy shows overheating the Chinese government does not hesitate to act and to act promptly and decisively. When Real Estate bust in the US provoked rambling effect over the entire Global Marketplace in China a curbing on speculation and targeted low housing prevented similar to what happen to US and EU effect in there.

When in 2009 stimulus packages were needed to add monetary supplies and keep the economy from falling as a result of decreasing export elsewhere and particularly in the US as a main trade Chinese partner, a “flexible” usage of raising Chinese internal demand and expanding trade relations elsewhere and particularly with South Asian markets kept Chinese economy in relatively strong growth of over 9%. In the First Quarter China the world’s fastest-growing major economy expanded 11.9 percent in compare to the last year and now Chinese government takes prompt action again:

China’s Rules to Curb Property ‘Madness’ Will Take Effect Now

“The market is having its “last madness” and speculation may dissipate in a year or 18 months on extra action by local authorities and an increased supply of low-price, so-called policy homes, Li said.

Cheung Kong (Holdings) Ltd., the Hong Kong developer controlled by billionaire Li Ka-shing, said yesterday that efforts to cool the Chinese property market are “timely.”

“You want to take action before the market gets too hot,” Justin Chiu, executive director of Cheung Kong, said in a Bloomberg Television interview. “Prices have gone up really quite a lot; people buying for their own use should do it within their means. If they invest, they need to be cautious about interest rates.”

Chinese government is not persuaded by lobbyists of falling stocks prices “The Shanghai Composite Index fell 1.1 percent yesterday” to moderate or change their policies, they are acting indiscriminately using the available “tools” of economics for prevention or stimulus when needed.

In comparison to China, here in US a partially pro political and ideologically motivated system of the ways of economics is used by the government for prevention of economiccrisis or stimulating the economy when needed.

President Obama spent years to promote the Health Reform in fierce fight over details sometime quite irrelevant when the Health Reform is a purely economic “tool” for expanding economic activities and overall for so much needed wealth distribution and redistribution in US. This constant talk of US deficit and constantly rising National Debt also handicaps the Government to take decisive prompt action when situation arise.

The economic “tools” are more considered ideological prerogatives for political gains andEconomics is more considered as a believe in something could be the Right “trickle-down” Capitalism could be the Left more business involved Government, whenEconomics is a Science by which any “tools” of economics should be used indiscriminately under different arousing economic conditions, any economic tool should be on the table: curbing speculations, financial regulation, enhancing personal liability of risk management of corporate structures, social policies, infrastructural expenses, healthcare expanses, SME tax breaks and low interest financing, subsidies and etc.

In time in ever globalizing marketplace and rising productivity, industrial production of the production based economics is not going to maintain conditions for many countries all over the world to keep up with their Fiscal expanses. When countries like China are building industrial production to new heights in combination with Japan, Germany and US, these may well build capacities filling the Global supply for such industrial production. Here in context the exhausting Earth resources, the Global pollution and deteriorating Environment should be taken in account, too: showing limitations to a constant Global Industrial Growth for all countries so these countries could keep their Fiscal expenses under control.

Industrial production adds the most to any country’s GDP at the moment, therefore under the current production based economics for a country to not be industrialized means either this country is very much underdeveloped like Bulgaria or it runs high deficit like Greece and Portugal. For US the effect of decreasing industrial production has a very similar effect to the Bulgaria and Greece: when in some areas like Detroit poverty roars just like it does in Bulgaria in some other areas like Chicago high deficit is becoming imminent. Thus the policies President Obama is implementing of “artificially” boosting Healthcare, SME and tax breaks to the low income are the only economicpolicies possible under the circumstances, though there should be some better ways for sustained economic growth in which private enterprenuarship is not curbed and freedom of business is not overtaken by governments, because what all learn from the last Great Recession was that Governments could take over businesses, financial institution in a very quickly, and as a conclusion when future recessions hit Governments will go even farther.

China’s handling of the last Recession is a good example of how such crisis should be handled but when a well balanced economics is combined with personal freedom of the US the results could be much higher, but to preserve this freedom we should adjust currently used economics to the arousing developments of the New Century.

©Joshua Konov, 2010

Market Development Verses Economic Growth


Market Development Verses Economic Growth

The global industrial overproduction capabilities have been gaining momentum accelerated by ongoing globalization, rising productivity, Chinas industrialization, the Internet and mostly by the vastly improving high technologies in manufacturing, communications, and international trade. The Transnationals have been given great advantages to find new cheaper markets that they could relocate or outsource industrial production, whereas the huge Chinese marketplace has provided them the needed demand to expand and aggregate their capitalization and economic health even in the time of 2007-9 Recession and post recession time. Simultaneously to the rising profit of the transnationals and big investors, declining industrial employment, middle class, and fiscal reserves have been observed in the United States, many European countries, and Japan, the manufacturing jobs that used to replenish fiscal reserves and maintain large middle class have largely disappeared being moved and outsourced, moreover the industrial jobs still left in there have been highly robotized bringing down salaries and numbers of employed. The low paid jobs that have been gaining in post recession time could not compensate to the lost high paid industrial jobs from the past. In general, capitalism relied on industrial jobs and high interest lending rates to raise profits, boost economic growth and replenishes fiscal reserves; however, none of these three points is working under the conditions of most recent market developments, whereas aggregated super-production, moving, outsourcing, the long-term and deep 2007-9 recession and post recession time, and e.g., made these three points, which are founding for the capitalism, obscure and underperforming. Hence, the governments are keeping their discount tier one interest rates close to zero, but the poor transmissibility of the economies is establishing the condition for new market bubbles instead of boosting higher percentage economic growth with high employment and salaries in manufacturing. The idea that manufacturing will come back to the US, or most European countries to employ the high single and double digits unemployed is unrealistic in its nature. The austerity measures in UK and Europe, the quantitative easing and stimulus packages in the US, UK and Japan, and the stimulus programs in China are temporarily economics tools capable of reviving business activities of mostly lower paid jobs in service sector, however the majority highly paid industrial jobs are gone forever being undercut by high technologies, and moved or outsourced elsewhere, therefore the capitalism could not work out these economies to sustain adequate economic growth to balance rising fiscal social and infrastructural expenses.

The main carriers of economic growth in the capitalism are big transnational corporations and big investors, which were suppose to stir economic growth by raising productivity supported by trickling down capital. Moving and outsourcing industrial production to wherever cheaper and qualified labor is found, these two economic agents are considered the noise in (1=f noise) formula for every country/market economic development that is suppose to close underdeveloped economies to the developed industrial ones. Hence, low taxes, low regulations, shady not particularly clear business laws, and corporate contracting are the keys to progress, industrial employment, and economic growth. However, for the last 20 years the system of capitalism greatly underperformed the 1=f noise formula has not worked, the middle class deteriorated, the manufacturing jobs are gone, and the business activities are shrinking lacking demand balanced marketplace.

Moreover, the economic growth, which was suppose to keep at the least as high as to compensate for the natural energy related price rising could not keep up marginalizing into the very low, or like in EU into the recessionary minuses. The deflationary forces have been gaining strength, whereas Japan is the good example of it. Thus, the market forces pressure has degenerated economic growth into market development, however neither the overall financial system, business laws, lending approaches or market security have been adapted to the natural processes of this ongoing change, thus instead of a sustained market development  be succeeded and maintained the economies continue accumulating fiscal debt, and underperforming with high unemployment and underemployment. The ideologies are ruling over the clear indicators of a system, which has exhausted its growth generating powers.

Economic growth differentiates from market development by its fundamental change of priority from big business and investors as main economic agent for economic growth to small and medium businesses and investors as main market agent for market development. Hence, the economic tools such as high lending rates, shady business laws, deregulated financial system, tax breaks for the rich, limited liability corporate structures, cutting down on social and infrastructural expenses, e.g. that worked to boost economic growth are to change into more sophisticated deleveraging diverse business environment using market tools such as enhanced business laws, unlimited liability corporate structures (to the decision making corporate structures – not to the investors), higher market security allowing lower lending rates, using social and infrastructural expenses as an extra equity demand, e.g. that overall will provide better balance to demand-to-supply markets. Market development is an enhanced version of the trickle down capitalism that rely basically on market forces to balance markets demand-to-supply but uses indiscriminately market tools to keep this balance in marginal proximity.

Working Papers

2011

  1. 2001 & 2007 Recessions prompted remaking of the international organizations
    MPRA Paper, University Library of Munich, Germany View citations (1)
  2. Piercing the Veil’s Effect on Corporate Human Rights Violations & International Corporate Crime (Human Trafficking, Slavery, etc)
    MPRA Paper, University Library of Munich, Germany

Joshua Ioji Konov, 2012

Bonding as Tool…


Bonding as Tool for Sustained Economic Growth

In the modern financial system bonding is requested on large and governmentally subsidized construction projects. To be sure that a project will be executed with needed quality General Contractors and even the Subcontractors are required to be bonded as a precondition for even bidding on these projects. To acquire bonding a company is underwritten by the issuer or the bond holding company.

“Construction bonding is a risk management tool used to protect project owners and developers. A bond constitutes a legal guarantee that the project will be completed as expected. In instances where a bonded contractor fails to perform, the bonding company will provide some form of restitution to the owner. While bonds are not required on all projects, there are strict bonding standards on government work. Many private owners and developers might also require bonds to protect the interests on various projects.

Read more: What Is Bonding in Construction? | eHow.com http://www.ehow.com/about_5295907_bonding-construction.html#ixzz1D5BP7nzH

Bonding is a financial tool that enhances the security to investors, developers and owners on projects.

Another tool used in construction business is Mechanics Lien that basically is a security for GC and Subs so they can get paid on construction projects: Mechanics Lien is used on any-kinds of projects large to small, and even it (Mechanics Lien)  may slightly differ from State to State the difference is not any great.

Mechanics lien is a financial tool used in construction business that provides additional security to General Contractors and Subcontractors to ensure proper payments on construction projects.

These economic tools are not perfect bringing lawsuits and long financial disagreements, however without them construction business would be in total chaos bringing these disagreements to longer terms.

Bonding and Mechanic Liens are tools that could be well adapted in other sections of the business law which could enhance Small and Medium Enterprises security and afterward make SME lending much easier and less risky.

Breaching contracts by not executing payments by Big Businesses to the SME is a very painful to the whole US economy with consequences taking many SME to bankrupts, and putting on the streets many SME employees: it is well known that more then 80% of all employment comes from SME.

Especially when economic crisis occurs Big Businesses tend to stop payments or negotiate Contracts price reduction in accelerating rate, thus, economic crisis deepens and effects US economy most painfully. Unless Big Businesses that are Global and could switch operations or even file multiple bankrupts and then rise as winners, for SME such bankruptcy filing are very often deadly and many are getting sold looking for equity or even close operations.

The trickle-down approaches of currently used Economics of Capitalism promotes and serves mostly Big Business, and the system worked well because the concentrated capital through such “trickle-down” brought industrial productions down to the US marketplace, but this process of Free Capitalism was totally interrupted by the Globalization and rising Productivity on a ever expanding Global marketplace in which the previously “trickling-down” to the US marketplace capital started “trickling-down” to China and elsewhere else. Large Corporations and Big Investors are moving, outsourcing, and investing to elsewhere in where ROI and projections for better ROI were much better, thus, US marketplace was left to SME to employ the majority of the US workforce when in the same time the “old” support for these Big Guys is still in place.

US Government intervention to the Great Economic Upheaval in the last few years was a result of the exodus of the Big Businesses and Investors from the US marketplace.

However what was done was a natural reaction to the Globalization and if rightly used it (the Globalization) could bring good to America, as long as these processes are rightly evaluated and actions for improving the situation are taken promptly.

One of the things needed for such Globalizing economy is the Bonding, ability to put Lien and correlated Business Contracting business law and regulations that can help SME to become more lend-able.

joshua.konov@yahoo.com

(For more see: Business Exchange: Market Economy)

©Joshua Konov, 2010

Philosophy of the Economy Part Two


Philosophy of the Economy Part Two

A probable historical period when under the circumstances particular individual skills were considered productive for a society or country thus the society or country’s tolerated and promoted such individual competition to maintain internal stability and advance in the regional or international competition.

Usually changing CILOD are painful processes of changing classes’ structure and redistribution of wealth thus wars, revolutions and social unrest have been a good indicator for changing CILOD. The approaching new CILOD is prompted by the new valued individual skills and knowledge needed under the new developments for a society or country to maintain internal stability and advance internationally;

Two things are of high importance at this time of change from one CILOD to another the Real Possibilities which reflect the socio-economic developments of a CILOD and also the Individuals Expectations which at time of change are getting higher: there is a relation between these two Relativities thus they usually closely follow one another: the expending Real Possibilities unlashes the constant Individual Desires for greater freedom of competition: the general direction of such competition is directed by the Real Possibilities and the current at the time possible spheres of competition: thus if we go back in history at feudal times the Individual Desires were much different from these in the 18 Century Empires of Europe and these from 20 Century Japan and even further different from the Post Wars Most Developed Countries;

The Philosophy of the Economy distinguishes and summarize these differences to show a very particular patterns in the world history which until now have been seen from other angles; by showing such changes it capitalizes of the constantly expanding role of the Individual Intellectual Abilities and the new historical role they are to play in the constantly changing new world.

From another side if societies-countries do not adapt to the emerging new socio-economic accents they may loose competitiveness and even further disintegrate and become unstable.

Philosophy of the Economy is a philosophical conception of locating the historical CILOD and the related Individual /for individual countries/ Current Levels of Development and thus showing a different way of such evaluations from the used socio-economic philosophical conceptions up to date. This new way is progressively distinguishing itself from socio-economic ideologies, nationalism, racism or any products of the Scarce Resources Economics philosophies; it is founded on the most recent socio-economic changes in the Worlds Markets and establishes a new conception for sustained market development for the Most Developed Countries and Blocks and for any other countries and even individuals into the new Globalizing Market and World.

The history of the world is a history of changing priorities of the role of individuals in societies: the Individual Desire to Compete for socio economic success as a natural human reaction in life and Societies’ from other side have established cultural and regulatory systems to keep this competition under acceptable limits..

There are many faces of competition changing historically but the progression is traceable from more physical which dominated human relations throughout centuries toward a more intellectual exploding sharply in the recent history: The Individual Competition for economic and social status well established and distinguishable in the most developed countries and markets has been growing into a Global competition as a result of new political and economic Global situation and the intellectualization of this competition. The importance of the Intellectual Property and Intellectuality over all has grown from internal for the most developed countries to international. The power of this kind of competition is fueled by the Internet and the political freedoms around the world allowing communications, free travel and overall free business relations. The energy of individual physical competition has been loosing essence and the individual intellectual competition has been gaining power. These changes could be traced historically from the time of the primitive societies, countries and empires when Individual physical strength has been loosing importance to individual organizational ones when skills and knowledge has been gaining importance: thus the values of what was important one time was not very much that important another time. As an example with the inventions of more distant weapons physical overpowering lost its importance. This process of intellectualization of priorities has been at its best for the last 100 years in the most developed societies and countries which obviously had established the best environment for the most adventitious tendencies to materialize. Declines of ones and changes of power from a country or a region to another almost always is a consequence of pour adaptability to the newly developing priorities of the change of one CILOD with another. In the past these processes of changes were much slower pace then recent ones therefore some societies, countries, empires in the past existed for centuries without changes; now days’ changes are very quick so countries adopt their laws and regulations quite frequently to maintain stability.

The allowance to individual to compete in societies has expended for a short time as never before by overpowering the existing ideologies and classes’ structures.

When someone reads about competition as the way societies were formed and built it starts looking like a jungle out there but in reality life is not a jungle because of human culture and religions, these social tools are for balancing civility and keeping Individuals close to God and almost all religions have been promoting modesty and positive for the societies values?

Human culture has been built by accumulating human experience and retaining social rules which have become part of everyday principles for acceptable individual behavior.

Social inequalities and the negative social powers coming from the socio-economic injustice have been offset by individuals accepting the realities of such social injustice by the Social Order. The negative energies as a result of ongoing social injustice have been redirected into basic nationalism and chauvinism or into more sophisticated ideologies of communism or capitalism, or religious fundamentalism. The suppression of individuals by the governments to protect the higher more adventitious classes is the way how modern societies were built; this was the way to maintain Social Stability and eventually for the most developed nations to maintain their status. Ever until most recent developments in the Global economy for societies to be successful they must had been Socially Stable and such was succeeded by the combination of free market and social order we have to differentiate Social Order from Market Order which is a generally socio-economic tool becoming possible as a consequence of the recent technological-political-global market integration and acceleration. Social Order had been ruling the societies up to now, a consequence of the pro supply economies based on scarce resources under low productivity and international aggression Social Order’s philosophy was therefore to limit the individual competition for socio-economic success to limited number of individuals who controlled big businesses and majority share of the national wealth; an approach quite beneficiary in such an environment. Social Order was needed to suppress a pointless for the CILOD individual competition thus the societies could balance the deficiencies of low productivity and technologies, part of the Social Order included also the classes division and constant wars and imperialistic aggression: which impact on the societies was similar: to maintain Social Stability. Mostly physical competition with low productivity, and international instability were to be offset by the Social Order and its Socio-Economic Tools.

Socio-economic structures of the Most Developed Nations under such environment reflected at its best such limitations and at the same time gave opportunities of more then the Less Developed Nations individuals to participate in the socio-economic competition; the Social Order suppressed the individual competition using socio-economic tools the Market Order suppresses individual competition using market tools; Market Order is a consequence of intellectual competition of the globalizing world overall plays similar to the Social Order role but it is based on Current Market Limitations: those limitations are pretty much a Demand to Supply relativity called Market Relativity: the always fluctuating market forces, progressively expanding Market of Individual Competition will break the existing Social Order in the Most Developed Markets and grow up into a Market Order into these Markets relativity which will expand and grow up into a global relativity of a Global Market..

The Global Intellectualization brings on a Global scale much different environment that substantially differs from the currently existing market environment; such change will effect all spheres of business and chance Economics fundamentally:

Let’s compare this new development on the Global marketplace to the braking of royalties in Europe after the great wars or to the dismembering of the Great Empires.

There will be two main factors of Globalization: one is the Global Intellectualization of Competition and second is the Global Integration of Investment. And because the enhancing access of individual competition medium to small companies and individual investors will be able to directly invest and provide services or product around the globe which by itself will limit the currently existing Global corporations to services and products requiring bigger resources to develop: some of the recent business and investment conglomerates will adapt under the new conditions other will disappear but they will loose the grip on the international market to the medium to small businesses and investors as these last flexibilities and adaptabilities will provide them with major advantages.

Employment market will transform from full time employment into free lance employment. Actually, self-employment will become major employment globally.

In this kind of socio-economic environment the role of the governments in Economics will change from historically protecting higher classes and big business to regulatory of protecting free market competition.

Global terrorism is most definitely the biggest threat to the market and intellectual globalization: it is the new menace of the future, but I believe if the market forces are let to work the abilities of the religious fundamentalists to recruit will be much more limited. Current isolation from fair competition of millions of people around the world has brought wars and revolutions and finally it has brought the Global terrorism and religious fundamentalism. There is an International Level of Expectations which also is traceable historically which off balance always provoke rebellious motions. The Possible Current International Level of Development based on the current technological and socio-economic structures allows much more advance structures of engaging more individuals into productive competition. The current Level of Expectations reflects the disharmony between possibilities People feel it, it is out there and the suppression of the individuals from participating in it provokes resistance; religious fundamentalists are just using this in their ways to steer troubles. If current governments of the Most Developed Countries and Economic Blocks do not release the pressure and establish a fair individual market competition the consequences could be disastrous. Historically the most recent situation in the world is comparable to the fall of world great Spanish and Austro Hungarian empires when they could not adopt to the new developing conditions; to the Russian revolution and First and Second Great Wars: always in each of these occasions a serious socio-economic development could be traced where the Individual Expectations for /fair/ Competition to a CILOD were not met, and social pressure erupted into violence. It is also obvious that these processes have been accelerating and changes are more frequent now days. The World is becoming a boiling place of energies and individual expectations are running higher and higher. There is a great opportunity these energies to be used in a creative competitive environment if Most Developed Countries’ Governments promote these new tendencies and generally people understand that the old Economics of Scare Resources is expiring when a Market driven pro balance between Demand to Supply Economics is emerging. Life as it is today will give place to these new developments.

Why Ideologies are not relevant anymore on the Global market place?

Well, ideologies and nationalism served well Most Developed Countries through History by maintaining Social Stability and as motivation social tool for their citizens, also as a tool of propaganda of their values. Obviously the values of the Most Developed Countries especially at the last 50 years have been most of the time more progressive promoting pro individual freedoms and open markets which by itself had had a positive effect on the Global scale. Before this they were much more protective of their own interests; imperialism and militarism were part of it: at that time the Global market did not almost exist except for them and the productivity was such low that appropriation of foreign resource was pretty much the only way for gaining economic and political power, therefore militarism, imperialism and economics were very well embodied together. In any point in History the most developed societies have in some way been advance of the rest so if some methods or policies we now consider inhumane and unacceptable, at the time there were justifiable to maintain dominance. In the modern history as it was mentioned before so many times political leaders misunderstood the reality and currently most productive socio-economic tools and raged wars, genocide and devastation: examples are countless such as Germany and Japan in the Second World War and Russia and China through the Cold War. Ideologies and mindless waist of resources in the last Century were synonymous. The politicians and lobbyists have been the best promoters of ideologies because these were serving them the most. In recent times in the Most Developed Countries anti corruption and pro humane politics is increasing which is a part of the coming new level of development. Same tendencies of cleaning the financial sector are in progress where tolerance for shadow operations and transactions is decreasing. The expectations for politicians and business leaders’ behavior and actions by the public are demanding. Ideologies are loosing their impact on foreign and domestic policies until the September, 11 2001 which terrorist act was followed by revival of new wave of ideologies; Religious fundamentalism from one side with its seemingly irrational demands and propaganda and the US and other Most Developed Countries Governments from another side locating a new purpose to exist and appropriate more powers over the individuals’ freedoms. Governments strive on ideologies which is a best weapon to explain mismanagement and mistakes by them. Terrorism is probably the biggest set back in the post war history, even bigger then the Cold war because then the enemies were known and there ware political exchanges between them when the terrorism is an underground resistance with no clear cause and unrealistic demands.

What has prompted this new level of development and why it is different from the previous ones?

The change from a Scarce Resources Economics to a Market Economics has begun with the improvement of the socio-economic structures which have given the fields for technological and political revolutions: the values of the free market competition and the individual freedoms have been penetrating country after country and even in some like China individual freedoms are still far from complete just the freedom to do business has open a lot of doors for individual competition; the Internet and the ability of more individuals to participate in virtual educational programs or to self educate, and to exchange ideas and thoughts; the political freedom of the Eastern Block countries which followed up by some of them becoming members of EC; country like Bulgaria has virtually built up a crediting system overnight with staggering yearly growth; the powerful intellectual revolution in India which enhanced education and high tech employment, the politically stable governments in South America and Asia, and the most important the first time in history decentralization of the global investment and the intellectual competition which has come with the internet and which could not be controlled by only Developed Countries and Blocks or by other Governments.

Life as it was is gone: in the new World the most advance countries and blocks will be the one which value individual freedoms and intellectual properties. The most valuable resources are not scarce anymore because they are Intellectual and if some of the richest men on the planet are getting there using Intellectual properties obviously the price of becoming wealthy and successful does not anymore relates manufacturing, or providing services or even financing business there are higher businesses and they are the intellectual properties related ones. The materialization of row ideas is becoming very fast which by the way is going to be the business of the Future itself. From ideas to materialization back to ideas: constantly improving technologies in all spheres.

What becomes priority for a country if it is to maintain or achieve most developed status?

The way individuals compete for status countries and economic blocks compete too; may be in some future it will change when the individuals will become dominant in this competition but this is still in the future for now countries will compete for domination.

US Scarce Resources Economics and the capitalistic social philosophy was based on the competition and relatively free unregulated market and a government protecting and promoting the status quo of classes’ division and big business limiting social investment and wealth redistribution as business not friendly economic tools which system was very advance for its time placing US on the top of the Most Developed Countries now with the newer changes of priorities such success will be achieved by adjusting to the new occurrences and developments of the Market Relativity by providing more individual to

· access to better education,

· better social conditions of everyday life,

· personal freedoms,

· improving and maintaining infrastructure in particular communications and public transportations,

· environmentally friendly energies and products,

· racial and lower classes integration, freedom of business but very strict business regulatory system against corruption and fraud:

· expending regularly adjusted to the inflation Social Security and Medicare

· heavily regulated stock and commodity exchanges expending Globally

· Associating countries around the World in integrated business and investment under the same regulatory system.

All of this could be summarized with Market Stability of the Market Economics which is replacing the Social Stability of the Scarce Resources Economics.

To control a pro social system without socializing the economics and creating huge bureaucracy a country must use the new tools of economics and monetary policies.

There is a change in valuation of equity: the new security coming off a regulated and in the same time ever expending markets provides more security of more assets considered equities then the old system. To consider an asset equity it must have relative security; when the system of Scarce Resources Capitalism relied on deregulations to stimulate business and at the same time created insecurity and this approach devaluated assets and the value of the whole country as all. Changing the system will change the securities and allow expansion of the current Monetary policies without devaluation of the currencies; and when such approaches is applied on a Global scale it becomes scary expandable.

What about if such prosperity double and triple the world population and creates food and other shortages and environmental disasters?

It is a very legit question and for this we can go even back to Socrates with him asking if an educated individual is a better individual and the answer could be “no” may be not, but historically the biggest damages to the environment and the overpopulation has always been done by less developed and freedom deprived nations and even in the most developed one the urbanization usually reduced the number of children per family, the education or as we can say the intellectualization of more people and the new opportunities involving these people in the Global competition will possibly reduce the risk form overcrowding or environmental disasters then increase the current one.

The Market Stability is not necessary that stable do not be leaded by the terminology; volatility in the worlds markets will not cease to exist in the contrary the regulations needed to maintain Market Stability will increase the reliability of the exchanges that by itself will accelerate Global investment overall increasing the current trading values multiple times: the more comprehensive and reliable information provided by the companies and brokerages will encourage more investors to step in on a Global scale: fraud is the main reason a lot of investors even today to not trade; and finally, the new monetary policies of the Market Stability will increase the Monetary Supplies obviously putting more money out there for trading.

If M supplies are increased would it not provoke inflationary forces and devaluation of the currencies?

The quantities of Monetary Supply in a Market Stability Competition is based on a different formulas accumulating Demand to Supply ratios /not other way around/ where the Demand is a comprehensive break down of market tools reasoning the evaluation of the currency; Market value of a currency will reflect the positive circulation of it /the currency/ which is based on the consequent value per unit: lets make an example if you turn around 1$ under a fair market competition and its value becomes $2 in one month the an additional $0.50 could be put in circulation without provoking inflationary or deflationary forces: until now the physical value of a country such as real estate equity, the final manufacturing and services production equity and savings equity which are mostly reflection of somehow physical possession of a sort and low LTV of the intellectual properties and investment have measured the Monetary Policies and this is because the value of the currencies was measured by these kind of equities but in the Market Stability Economics there will be more secured tools of economics providing value and therefore the perception for equity will change; such new tools are the investment in intellectual properties /the intellectual property equity/, in Regional and Global Development /the investment equity/, the business value which on a Regional and Global scale /the business equity/, a Country Infrastructure, a country Medicare infrastructure and etc. are considered equity too: all of these partially are considered economic tools now but because of the limitations of the market security even internally because of the ongoing non transparency hazardous approaches of the current exchanges and the Government deficit, and overall high insecurity their LTV or Money to Value are very low. Again Market Stability Economics is based on high Global growth which will raise the margins and on very heavy market regulations minimizing fraudulent practices and therefore providing higher security on more Intellectual and Investment equities therefore the value of the intellectual properties and of the invested capital will be considered higher LTV and MTV equity. These new equity will change the Monetary policies and the approach toward inflationary and deflationary forces as well; therefore more money will circulate and more business will be done over all, much more. Anything that contributes to a positive Market competition will be considered “equity” and could be supported by the Monetary Policies. Finally, the distribution of Wealth under the new conditions will differ substantially from the current one: the intellectualization of individual competition will give the opportunities to millions of people to participate in a Global competition; best organized and well maintained Small to Medium Businesses and Investor will benefit substantially from such developments therefore a lot of industries which could be done by using new technologies will expand indiscriminately but some of the business still be done by the internationals, anyway self-employment and free lancing will be increasing share on the employment market..

How the economics is changing from manufacturing and service related into intellectual and investment related?

Simply here is an example: “If one has enough security in a Latin American country to buy a well located property or invest into medium to small business the value of such investment coming from US could be multiple time as the value of a similar investment here in US because of the difference income generating and standard of life. The return on a business in this area compare to the invested capital is higher too. The missing link is market security in this Latin American Country” well the same example applies to local US securities: the shady speculative practices by the current regulations stop many investors from using the tools of investment for profit thus many are doing their own small enterprises in many cases not relating their experience and education. Small investors are feeling very insecure on the current Market exchanges as well.

The Scares’ Resources Philosophy of the capitalism is pro supply emphasizing on the business side; supported by politicians and lobbyists this ideology still rules: the fragmental business regulations and requirements bring the worst in many business people and businesses. The Scares’ Resources Ideology capitalize on such shady practices as stimulating business and over all economy: so called Trickle Down Economics thus Economic flexibilities is maintained by cutting employees benefits and insurance, by relocating or even worse as Enron by skimming billions but overall it is better for business; From another side the Socialized Economics of many countries basically entitling Governments to distribute high percentages of their GNP’s shows very inflexible and insufficient structures product of Scares’ resources ideologies too, in this case protecting the societies from individual competition: in this kinds of Economics doing business is very difficult and very risky.

Market Stability Economics is a free market competition under heavy common law regulations: the overhead control shall be done by the federal courts when the Government shall be represented by the district attorneys. The current Tax System should be simplified either by across the board Sales Tax or very simple Federal Tax; the Globalization of the Market will be best controlled by a Sales Tax. The labor laws should be simplified promoting self employment thus the contracts should be enforceable with no large expenses: actually a whole number of laws should regulate the warding and structure of all business contracts to make them easy enforceable, the payments of contracts should be easily enforceable with a full recourse to the company’s officers. The system should be enforceable Globally as said before which should not differ in any way from all participants. All rules must be fair to all participants.

The major difference of the new system is that the internal for US regulation have to apply Globally thus no country should be allowed to participate on the US market without full compliance similar to the practices of EU expansion under the common rules and regulations. The biggest mistake NAFTA made is not requiring from Mexico to follow the same regulations as the US companies did. As an example of right policies was the requested by EU to all candidate members to adapt numbers laws and regulations from anti corruption ones to anti pollution and energy preservation ones. Which policies is helping those countries to establish more stable markets and these policies have already lifted multi times the International Investment to those candidate and new members countries. EU in the other side has shown an anti business bureaucracy and also a growing segregation between having and having not nations; nationalism and chauvinism are and will be the biggest obstacle toward adapting the Market Stability Economics. US are much more advanced in integrating all kinds of people in its market.

The new Market Stability driven Economics cleaned up from business irregularities, shadow practices and violent market fluctuation should be more productive for business and individuals alike: the upcoming Intellectual Revolution will open a new world of opportunities for many new people currently non productive: this new access will release some negative pressures and tendencies which will decrease the recruiting powers of the Religious fundamentalists or mindless fruitless ideologies. The process of these new tendencies to expand and realize themselves should be quite prompt if the new policies started being adapted by the Most Developed Countries and Markets. The fierce economic competition among these countries and economic blocks will not relinquish anyhow and there will not be any peace in the Global economic competition, the main difference of the new developments are better regulated economics which will higher the security of investment and intellectual properties, and business practices, it will allow a smother process of globalization, it will allow more peoples and countries to participate in the global competition, it will establish a better peaceful World by limiting the powers of the fundamentalism and other negative social ideologies.(to continue)

by Joshua Konov, 1989-2008

 

Philosophy of t…


Philosophy of the Economy Part One

 

Plan

Chapters:

1. Introduction.
2. History of development
3. Levels of Development: distinctive points, changes and reason for changes
4. Philosophy of Development
5. Psychology of Development
6. Social changes and consequences of Development
7. Nationalism, Ideologies and Political Systems enforcing them.
8. Economy and Market Forces: Historical Development
9. Globalization and consequences
10. Most Developed Countries different approaches in the modern world
11. From struggle to survive among individuals, societies, countries, blocks of a pro Supply Economy to a Regulated pro balance between Supply and Demand Economy
12. Life in Modern Developed Countries
13. Social tools of acceleration and deceleration.

Chapter I – Introduction

The Globalization has become an irreversible historical process constantly expanding and evolving at the same time the social and economic conditions in the most developed nations have succeeded raising productivity and concentration of capital. The old tools of Economics cannot anymore accommodate these new developments and are not able to establish most favored conditions for such an important to the World and for any individual countries new development to evolve smoothly by avoiding major economical crises and without destroying the environment. Having inadequate Economical Tools creates volatile market conditions which work in conflict with current possibilities of market expansion: this research is to proof the change from a Scarce Economics based on volatile interest rates fluctuations and deregulated speculations into a Market Economics based on market stability, regulated economics and Global Expansion of even small to medium size businesses and investors.

With the current system of Economics even the very resilient US economy will not be able to sustain the ravaging forces of shrinking profit margins and market crashes. It has become obvious for a company to maintain its profitability it must go Global /also National for US and EU/: but the Medium to Small companies and Investors are hardly capable going global in a highly deregulated markets and exchanges.

There are great possibilities in a Global scale for establishing a heavy regulated but at the same time free market place where more individuals from elsewhere will be able to compete in very increasing intellectual competition; this process could be accelerated by increasing the security of doing business and investing capital which will increase the LTV and MTV of the assets and even further to enhance some currently considered liabilities or with very limited LTV and MTV. When doing that the Monetary policies will change because of this extra security so more money will be able to circulate without provoking inflation; then more business and investment will follow and gradually these rules and regulations will envelope more markets around the Globe to establish a Global Market Place for even Medium to Small Business and Investors having such Global access.

This is the end of the shady Trickle Down Economics or the bureaucratized Socialized Economics and the beginning of a real Market Economics /called by me a Market Stability Economics/ because it relies on the Market Competition and on Regulated Business Practices and Direct and Indirect Investment under clearly stated laws and regulations implemented by the Governments but controlled by the Courts.

All these is becoming possible only in the very recent times by the incredible developments of the Internet, related technologies and communications; the fall of the Eastern Communist Block, the expansion of the European Union, the entering of WTO by China and by the expending freedom of business all over the Globe which as a consequence increased Global Productivity, Access to the Market Place, quick jump from Ideas to Realization, opening the Global Employment Market, allowing expanding Global Direct Investment, allowing Internet Education and Self Education. The World has changed forever.

The following is a Philosophical Conception attempting to substantiate the new changes through Historical sequence of developments and conclusions.

Economy is one of the reasons setting our life in motion and moderating our personal desires and behavior with compliance with the social rules of organization to accomplish highly sophisticated structures of societies and countries and lately economic blocks.

Many historical occurrences could be explained by the Economics and the ways individuals and societies are affected by it. The competition among individuals for economical and political advance in any society which competition has grown into Global has always been the way bringing innovations, improvements and progress but in the same time bringing corruption, injustice and the following revolutions and terrorism.

The Individual Desire for Success and the following competition among individuals is in the beginning of relations between individuals and societies as a general driving force which organized societies into countries, empires and economic blocks. A constant struggle between the interests of the society and individual interests is regulated by cultural and religious rules and common laws which moderate and leverage this relationship so the societies could function.

Historically the competition for success has moved from more primitive and physical one using more physical tools and methods for success to more intellectual and abstract one using more intellectual methods for success. So consequently of such changing priorities the social rules of behavior have changed accenting on these constantly evolving values.

Economy is a main field for individuals’ competition and also a general tool for comparison among societies; it has been evolving and changing with the new values invoked by the the general intellectualisation. Relativity of a society or group of societies to adjust their values through rules and common laws to fit a Current International Level of Development-CILOD is called Country’s /for this society/ Current Level of Development- CCLOD. This philosophical law of Social Relativity SR is to be established based on historical statistics and method of comparisons. Every single moment in history has its CILOD and every society has its CCLOD at any time of its existence.

Why are we attempting to figure out the relativity of historical economic and social development?

The up to now marginal understanding of the processes of human development by the Philosophy over all has being limiting the abilities of different societies to find for themselves best ways for development: thus ideologies such as pro Capitalistic or pro Socialistic, or pro religious Fundamentalistic have been playing role in preventing philosophy to clear the values and reasons for socio-economic progress and development. The disconnection between Philosophy and Economics for some time has fragmented general abilities for comprehending a conclusive system of evaluation and consequential objectivism. Economics has drifted away from philosophical thought to a practical science of statistics and ideological self-adjustments. The desire of practical clearance of ideas has taken over philosophical reevaluations of sometimes subjective values. In context of such ideological more like status quo science of Modern Economics real historical possibilities have been sidelined and obscured as not complying with the “political correctness” and its accents. The same approach certainly applies to the ways different tools of Economics have been evaluated and used however under economic and social pressures Economics has been evolving an examples is the change form the Gold reserve backed currencies in the past to the more abstract current system.

The evaluation of the basic inflationary processes, the most recent effect of high tech developments, Internet and Worldwide Political liberalization causing fast Globalization; even the past changes from Farming driven Economics to Manufacturing Economics and now to Services and Investment Economics have been poorly evaluated not followed into conclusions and consequent resolutions which is to bring a coherent philosophical systems to describe these changes and provide guidelines to the Future; the understanding of Economic and Social tools historically has been very fragmented over the board.

The consequence of such insufficient approaches toward Economics have been many wars, revolutions, totalitarian dictatorships,depressions and most recently the rise of religious fundamentalism and terrorism. One will say that I am going too far in giving the Economics such powers: he or she could be right there are political situation driven by social forces not relating economy on their surface but beyond any socio ideological motion stay pressures of social expectation of certain values and motivations and such pressure is still a product of individuals’ desire for competition which was steered to ideological values because of lock of economic competition for majority of individuals to participate, and because governments’ role have always been to defend the status quot of socials structures the energies which could be used for such economic competition have been flown into nationalism, racism, chauvinism and the general ideologies as well

If in prospective we evaluate the economic and social reasons for the Second World War as an example when the conception of imperialism at the time by Hitler and by any world powers that appropriating foreign resources and occupying others’ assets was considered equitable when if a detail evaluation is done these neighboring countries could have been much more beneficial as trading partners which you can see in the new developments in Europe; Such an example of conceptual misunderstanding of economic and social tools by all of the great powers and Nazi Germany was a result of this mindless war which did not do any good to anyone but after the devastation it made clear that unleashing the dark powers of individuals’ powers instead of using their creativity is worthless. In the new world of rising terrorism such misunderstanding of reality by the Most Developed Countries’ Governments could have fatal consequences for any country or even for the World. To try to suppress millions of people living in poverty and religious fanaticism is not a feasible way to go forward into a new world when the possibilities of the Current International Level of Development to engage Worldwide individuals into a productive competition are real; denials of opening these opportunities by the Most Developed Countries based on ideologies such as status quo US capitalism or in case Chinese socialism, or European social bureaucratism, or nationalism, or whatever prejudice will only bring tensions, insecurity and environmental disasters..

One will say if there are too many economic and social factors to be put together in a way which can provide comprehensive evaluation, is it correct?

Yes if the information is accumulated with no strict guidelines. In case the principles of this conception is simplicity: not ignoring any major factors for socio-economic development but concentrating on the guiding ones that have the most effect on the projected development.

How competition could be considered main engine of individual and social relations and development?

There are countless numbers of traditional and circumstantial factors in an individual life which play roles in characterizing this individual and his/her correlations and social interactions. The economic factors are limited but very important part of this process. The conditions in which an individual grows up, the stability of day to day life, the possibilities in front of him/her, the positive and negative pressures on him/her by the society; obviously negative economic pressure could have very depressing and mind altering effect on ones character; the lock of opportunities could contribute to ones instability and perplexities. Historically ideologies, religions, nationalism and general culture have helped offset the instability the lock of socio-economic opportunities to the majority. The social structures have established an array of tools to suppress individual Desire for Competition which suppression `historically has been antagonistic based on classes’, nationality and other belongings to limit majority of individuals from competing for socio-economic advance. But in a world of low productivity and political chaos such limits of competition ware actually positive for the stability and the survival of these societies

The main competition for individual success has changed not only from physical to intellectual but also from very limited opportunities for particular classes to more general and accessible; this process of opening of socio-economic competition to higher percentage of the population is at its best in the Most Developed Countries which historically have always been the most advance socio-economically thus at any PCLOD the CCLOD of the MDC is basically a result the best adaptability of this country or block at the historical moment to use in a better way Current Possibilities’ potentials of their citizens in the most productive at this moment ways. Because in different historical moments different socio-economic structures were working best, examples: the Roman Empire’s strong militaristic approach supported by political power needed militaristic organization and social philosophy to dominate the current World thus Roman structures were best reflecting the PCLOD and therefore Rome dominated the known world she was the best adapted under the circumstances. Other examples are ancient Persia, China, and Aztecs in the Americas.

Obviously to base this philosophical conclusion on the approach of evaluating these historical changes the continuity and relativity of these changes have to establish: and it may be best presented as a change of socio-economic philosophy and psychology from pro physical pro manual one reflecting at the time manual labor economic approach as dominating to a pro intellectual one apprehended by the developing high technologies and economic globalization one when intellectual economic approach is dominating. This socio-economic evolution is reflected into historical changes; here it needs to be mentioned that they were periods in the World history when these processes of intellectualization were severely interrupted and even reversed an example are the Dark Ages in Europe, or the Mao’s governing of China the changes are not necessary a flowing continuation but more like a spiral like continuation.

Someone will say that this philosophy replicate Marxism for these people my answer is that Marxism was based on development based on struggle between the having and having not classes when this Philosophy of the Economy is based on the historical continues change of historical priorities from physical to intellectual. Which I believe has given the opportunity of the human civilization to advance. So as an example when technologies and socio-economic structures were underdeveloped appropriating foreign resources was the only way was a country to advance into interstates competition therefore the best organized countries were establishing their empires by concurring others and imperialistic foreign policies were supporting them: in such socio-economic environment individuals’ competition was redirected into militaristic by nationalism and ideologies Individual Desire for Advance was obviously related to individual advance by militaristic ways. The same principle of timely important values applies to pre historic times when instead the organization militaristic skills of the time of the empires, personal physical personal strength had been much more valuable therefore the “heroes” from the Ancient Greek mythology were compared and related to the gods. When Great Empires before the Great Wars of the 20th Century were occupying the known World the mentality of conquest and spread of civilization was reflected in the literature, economics and science of that time to justify their policies fierce nationalism and chauvinism were promoted by the Governments and other institutions: “the philosophy of being better meant being militarily stronger, and even on a common level that a man is not one unless going through the army” prepared individuals for the armies and multiple devastating wars. Now days such “philosophy” sounds almost comical; people have understood the consequences of wars and they are used only under extreme circumstances.

Throughout history continues accumulated information was needed for successful competition which is another factor for coming to a new Current International Level of Development. Such higher ground can be reached only by expanding and enhancing current possibilities which always are a result of improving economies and political structures. On the ground base improving technologies, trade relations and business environment in any time of history had prompted a new CILOD.

When productivity was low classes based on individuals’ background and individuals’ access to resources and position in the society have been playing dominant role in societies around the world. Because of the low productivity to maintain “normal” level in the society multiple servants and feudal taxes were needed. Thus the theory of scarce resources was born. To suppress individuals for demanding more participation in economic competition a philosophy of servitude and tyranny of oppression was established: all over the world.

The negative socio-economic pressures on individuals accumulated in such conditions usually brought rebellions and revolutions therefore societies needed release valves: the nationalism, chauvinism, xenophobia, religious hatred have naturally been parts of such social negative built up releasing system which was promoted by government and negative social pressures were channeled into regional wars and constant insecurity.

The next and higher step in this social prevention system were the ideologies which were higher more sophisticated level of prejudice: in both systems of negative pressure releases any individuals not complying with the “acclaimed” ideas were persecuted and considered asocial and sometimes even enemy of the states: ideas for righteousness fitting some current criteria have been used and continued to being used for the same purposes even to promote belonging to causes and principles to suppress individual desire for success.

The theory of Scarce Resources has being based on a pro supply economics and competition it reflects the allowed by this conception limited percent of individuals access to fair competition which is accessible mostly for the upper classes who control big business and investment in now days. The Scarce Resources Economics including access to good education, to borrowing Capital, to market exchanges investing is pro Supply and the supply has been controlled by the big business and large investment groups and their strong lobbyists; the Governments have been part of this system by promoting their interests.

US is a perfect example how this conception works where good schools are quite expensive and the theory of income based education is dominant: which theory was probably good for a steady developing US economy and not so good for the rapidly developing global market which promotes different kind of competition by globalizing the labor market so the large corporation are looking elsewhere for qualified scientists and technicians, following on such demand large US Universities responded by creating graduate programs in science where high % PHD graduates are of foreign origin. Same conception prompted number of software specialists and medical doctors to come from India and elsewhere to fill the existing demand in US. So far Business Graduate Schools even opening some competition are lingering behind relying on the more conservative and seemingly less demanding business competition as still a steady place for the upper classes kids to be promoted but with the Europeans and Chinese’s high accessibility for commoners to all strong undergraduate educational programs and the becoming extremely sophisticated Global business a demand for highly intellectual business managers will drive Business Schools toward similar to the science faculties global approaches of admittance and scholarships.

The philosophy of Scarce Resources doesn’t reflect the demand for allowing more access to competition in order a society to keep up with the global development. Obviously US economy is based on Supply and Demand adjustments therefore finally the most advance individuals are to succeed but when the educational system limits lower classes from stimulating education the potentials of many capable individuals have not being enhanced properly will bring disadvantage to US economy as a whole. The theory of Capitalism is based on ideology not on reality and therefore it is bound to change or US will lose its Most Developed Country’s superiority.

The ideological status quo for government to protect and promote big business and large investment by closing eyes of shady business and investment practices generally lower the security of the assets in US which hits on the diminishing value of the dollar and the gradual changing investment to more stable foreign markets of Europe and China where pro social distribution of wealth creates “stable” demand. Which systems by the way are not sufficient and flexible at all but on the principle of “the least evil” work better. Here it must be made clear that Philosophy of the Economy’s Market Stability Economics is not based of socialization of Economics and Governmental redistribution of wealth but it is based on a heavily regulated business and investment structures and increase the equity of US infrastructures and social expenditures such as Medicare and Social Security which security will increase the value of the US economy overall and retain its status as a Most Developed Economy and Market.

Historically, the upper classes protection was normal because in a system of Scarce Resources the statuesque has had progressive effect on the economy by creating relative market stability. The problem with this system as with all systems of selective access to competition is the ongoing globalization where US market could not be considered anymore above others and untouchable. EU, India and China are entering this competition which used to be regional for US market making it a global competition. Big business and investors are moving their operations elsewhere and the process will accelerate.

To not loose competitiveness US economy must adapt under these new developments and capitalize of and promote the advances in communications and other spheres of technologies, of the US infrastructure, social services and Medicare, educational system in particular highly developed graduate schools and promote their expansion, the globalization of the very flexible US business and promote access to global markets for medium to small companies and investors; which actions will establish a more open competition for more individuals to participate and the strengths of the US free market competition will expand and be empowered.

The US educational system is one example of based on ideology system, but the US graduate studies universities are adapting into these new global competition and finally the flexibilities of the US interest driven education will prevail to maintain its high status by accepting more foreign students. The looser will finally be the lower and middle class Americans being isolated from the global competition.

What is really changing historically and could it be considered a new development?

Very simple:

1. the pro supply trickle down or socialistic economics are changing in a pro market stability economics 2. the improving high technologies, the globally expanding business freedom, the access of capital medium to small businesses and investors will make business not anymore limited to a few conglomerates on the Global Marketplace: the medium to small companies because of the new technologies will be able to provide adequate products and services globally. 3. Manufacturing is no more driving force of the economy: Global Investing and Intellectual properties are becoming the driven forces;

Life as we know it is changing and the change will accelerate.

The most advance countries in this environment will be the one having the best developed system to establish the best conditions for these new developments to flourish.

EU has very well regulated economics but the nationalism, chauvinism and overextended governmental control over the business are stoppers existing from a previous CILOD and do not allow the flexibilities needed for Possible Development for this new CILOD. Still EU has better then the US regulated economics which reflects the devaluation of the US dollar to the euro.

China’s economics is a mixture of free market and socialism, and is well based on the hard working population which had been isolated from the rest of the world for hundreds of years the Chinese have cultural differences from the rest which well work well in their current organization. The huge size of the population and the market attracts foreign investment and foreign corporation which allows the Chinese government to regulate the economics. Communists and socialists’ economics are pro supply economics but the distribution of wealth is regulated by the governments which gives them a pro demand market abilities. Their problem was and always will be the limited flexibilities to act properly to adapt to the rapidly changing realities: when ideology plays regulative role and ideologies as usual are not market driven; also because they limit personal freedoms it affects the horizons of business expansion.

What is the Current International Level of Development and how the most feasible Economics could be determined?

This is a Million dollars question and the whole study of “Philosophy of the Economy” is to attempt answering it. One thing for sure in order this to be done an evaluation of historical processes of development shall be done which must justify and trace historical changes and their relativity if any.

Chapter II History of Development

When Karl Marx proclaimed the struggle between of the having and having not as a main force for development he was wrong it is a struggle but it is between the Individual Desire for Competition and Social Tools of Suppression and Limiting of Individuals’ Access to such competition considered socially unacceptable at certain historical point. When John Lock proclaimed the market competition of a Supply to Demand based on a Scarce Resources Supply driven Philosophy he was wrong because even at the time his philosophy was adequately reflecting the driving free market economics he could not oversee the coming of a pro Market driven Demand to Supply balanced Economics. The scares resources is a historical justification of suppression of Individuals Desire to Compete: putting this statement from Social Relativity prospective such suppression had positive competitive effect for maintaining Social Stability at any historical moment until most recent global situation. So the Marx’s upper Classes in historical prospective had positive effect on development by establishing needed for maintaining such development Social Stability. At the same time the market competition of John Lock was a revolution by itself coming from a feudalistic structured Europe into a pro market driven world where the market adjustments were based on economics not on Kings orders. Things were changing a new Current International Level of Development was arriving.

What is a Current International Level of Development CILOD and how it changes?

A probable historical period when under the circumstances particular individual skills were considered productive for a society or country thus the society or country’s tolerated and promoted such individual competition to maintain internal stability and advance in the regional or international competition.

Usually changing CILOD are painful processes of changing classes’ structure and redistribution of wealth thus wars, revolutions and social unrest have been a good indicator for changing CILOD. The approaching new CILOD is prompted by the new valued individual skills and knowledge needed under the new developments for a society or country to maintain internal stability and advance internationally;

Two things are of high importance at this time of change from one CILOD to another the Real Possibilities which reflect the socio-economic developments of a CILOD and also the Individuals Expectations which at time of change are getting higher: there is a relation between these two Relativities thus they usually closely follow one another: the expending Real Possibilities unlashes the constant Individual Desires for greater freedom of competition: the general direction of such competition is directed by the Real Possibilities and the current at the time possible spheres of competition: thus if we go back in history at feudal times the Individual Desires were much different from these in the 18 Century Empires of Europe and these from 20 Century Japan and even further different from the Post Wars Most Developed Countries;

The Philosophy of the Economy distinguishes and summarize these differences to show a very particular patterns in the world history which until now have been seen from other angles; by showing such changes it capitalizes of the constantly expanding role of the Individual Intellectual Abilities and the new historical role they are to play in the constantly changing new world.

From another side, if societies/countries do not adapt to the emerging new socio-economic accents they may loose competitiveness and even further disintegrate and become unstable.

Philosophy of the Economy is a philosophical conception of locating the historical CILOD and the related Individual /for individual countries/ Current Levels of Development and thus showing a different way of such evaluations from the used socio-economic philosophical conceptions up to date. This new way is progressively distinguishing itself from socio-economic ideologies, nationalism, racism or any products of the Scarce Resources Economics philosophies; it is founded on the most recent socio-economic changes in the Worlds Markets and establishes a new conception for sustained market development for the Most Developed Countries and Blocks and for any other countries and even individuals into the new Globalizing Market and World.

The history of the world is a history of changing priorities of the role of individuals in societies: the Individual Desire to Compete for socio economic success as a natural human reaction in life and Societies’ from other side have established cultural and regulatory systems to keep this competition under acceptable limits.

Follow up: Part Two

 

Employment, Capitalism, Environment and Resources by Joshua Konov


 Modern day’s economics encounters conflict between market (market synonyms of economic, economy) growth that could boost employment and the environmental regulations, which are obstacles, adding to high taxation and business regulations such conflict could have serious weakening effect on businesses’ competitive edge. It is so right, because in current relatively low security markets founded on cyclical runoffs and high lending rates, particularly to small businesses and investors, the business competitiveness is negatively affected, a step farther, by additionally imposed environmental rules and regulations. In addition to, the environmentally friendly products average high production prices and high technological machinery prices that makes such production quite expensive, indeed. Only subsidies and tax initiatives could help sustain market competitiveness, however, these subsidies and tax breaks are watered down into unproductive artificial market interference in an insecure market, which instead of enhancing the market competition are pushing it down making it totally dependent on such tax breaks and subsidies for their existence.

LONDON — For years, Europe has tried to set the global standard for climate-change regulation, creating tough rules on emissions, mandating more use of renewable energy sources and arguably sacrificing some economic growth in the name of saving the planet. But now even Europe seems to be hitting its environmentalist limits. (Europe, Facing Economic Pain, May Ease Climate Rules By STEPHEN CASTLEJAN. 22, 2014)

The global business conditions of many countries running high deficit and accumulating national debt establish highly unlikely conditions to meet the demand for environmentally friendly products and alternative energies anytime soon.

Declining Earth resources prompt energy related inflation, which aggravate the need to maintain consistent economic/market growth in a runoff to survival for developed and developing markets alike. However, the 2007-09 Recession has been followed by anemic rebound of employment and of personal income, contemporaneously causing market imbalance of demand-to-supply high national indebtedness. Easing Interest Rates, Quantitative Easing and Stimulus Packages have decelerated the processes of declining economic indicators, but could not boost market activities to the needed fundamental turn around. Outsourcing and moving of industrial production prompts high unemployment and marginal personal income growth. The inadequate consumption resulted from the declining industrial employment has long lasting negative consequences to the market development. The fundamentals of the trickle down Capitalism lay on relative high lending rates, shady business that benefits large transnational corporations and investors, however, under the new developing market conditions of globalization and rising productivity, of the Chinas that make outsourcing and moving industrial production targeting reduction of expenses much easier, the trickle down approach cannot function appropriately.

In this new global market, small to medium businesses and investors play progressively higher role to create employment, enhance consumption and business activities overall, the current economics empowers large corporations and investors in conflict with what is necessary for market development. The shady business practice and unfair competition might had performed well in a pro supply economies of the past, but cannot ensure needed market development of the presence, and such inadequacy is particularly transparent when it comes to the issues of environment and diminishing Earth resources, which are counter productive and cannot keep up market balance, therefore fiscal indebtedness is in progression.

The question remain: if the Earth environment is so much affected by pollution and the Earth resources are so quickly declining to require prompt action?

Even some scientists and politicians object global warming and fight restrictions on pollutions, there should be no question that our environment should be saved to the maximum in the future, and very rarely someone would object it. However, the economics of Capitalism is industrially based: in meaning, industrial production is considered the highest contributor to the GDP of any developed economy, therefore in times of slow growth and factors that regulate industrial production, limit it too, and while the competition is Global, coming from places with wider opened doors and more flexible regulations, the competitiveness and success of any economy is directly affected by any regulations the particularly environmental ones. Hence, if Environmental protection, environmentally friendly production and alternative energies are to be implemented: it could be done only on an equal base globally, or/and if the system of economics is amended to apprehend these new developments. Any other ways, such cause is “cauza perduta”, and especially in the conditions of slow economic growth.

Subsidies and tax breaks could help environmental protection to a certain point, sure, it could be done only nationally for the most developed economies, but even in there counter market measures of such regulations are politically resisted; these are just very difficult to be implemented when working against the markets.

What kind of economics could adopt Environmental protection, environmentally friendly production and alternative energies into a productive competition?

The Capitalistic economics takes productivity as the main economic tool for growth, thus anything that prompt it is good and anything that slows it is bad for the economy: social, educational and infrastructural expenses are bad, business laws and regulations are bad too, while deregulated and shady business practices, lower taxes for the rich, no social or medical protection and expenses are good.

Well, are all of these the bad, bad or the good, good? – Yes, these are…, but such statement reflects the reality of the modern days Capitalism of industrial production and trickle down capital.

The world history (recent Greece is a perfect example) shows that governments could not manage markets, being inept and inflexible the governments create redundancies and economic upheaval. Only free entrepreneurship and a free market business environment can create market balance, however the 2007-09 Recession was not created by the government’s spending or redundancies, but it was a product of real estate overcapitalization in an economy depressed in any other sectors, which was not growing proportionately. I may bravely concur, that if the US economy in 2007 was growing proportionately in other than the real estate overcapitalization the crash effect of the overcapitalization would have been different.

It becomes obvious that the governments running economies/markets or overcapitalization product of deregulated business could bring very similar consequences.

The productivity as main tool for economic growth runs on a high gear runoffs of industrial production, for which, I believe, is insufficient to steer “noise” in the 1=f noise formula, and in the real life for bringing accelerated business activity and prompt market development (development equals growth). The small and medium businesses and investors have become the main economic agents, in times of high technologies; globalization and rising productivity do spear employment and business activity. However, shady business practices, the lock of international intellectual property protection, the over all high interest rate lending works better for large transnationals and investors, establishing unfair market competition. But, if artificial tools such as tax breaks and subsidies or low interest rate loans only are used to promote fair market competition, the long term results would not be any positive, therefore, some market related and natural for the markets economic agents should be adapted to do it.

Which are these natural for the markets agents and tools that could marginalize the unfairness in market competition and steer the “noise” as an addition to “productivity” to prompt market development and maintain market fluency, and thus raise the market security that will lower lending interest rate?

  • To change limited corporate liability into unlimited

  • To enforce business contract lows

  • To enhance project insurance and bonding requirements

  • To enhance intellectual property protection, globally

  • To enforce equal business laws, globally

These and some other points, I believe, would raise market security, and thus establish relative fair market competition by lowering lending interest rate and accelerating business activities.

After these points are implemented and only then, the role of social, educational and infrastructural expenses (which are considered as artificial for the market agents) should be better comprehended, as partial equity market agents for balancing market’s demand to supply.

But the natural for the market agents should have paramount standing in prompting and maintaining market growth.

The Environmental protection, environmentally friendly production and alternative energies are to be implemented under these new more secure market condition as a main agent for market development, because in a more diverse business climate of accelerated business activities the small and medium businesses and investors  would explore any possibilities for marker exploration; thus, lower taxes and subsidies would have more vivid effect on the market development, indeed.

Joshua Konov, 2012

How the Middle Class, Small and Medium Businesses and Investors can benefit from the ongoing Globalization


 
 
September, 19 2010
 

As a natural continuation of a number of articles of mine explaining the effects of the ongoing Globalization on different segments of the markets, is to extract the possible ways to prompt economic development into these new conditions of concentration of industrial production by a few countries: China, the US, Japan, Germany and the new comers India, Vietnam, Brazil, that concentration supported by ever rising Productivity prompted by high technologies and open marketplace creates economic conditions unknown by its Fiscal shortages to many countries, markets. In such conditions the most affected groups are the Middle Class, the Small to Medium Businesses and Investors who are in the foundation of any country’s economy mass employment and high standard of life. Thus, to deal with shortages of industrial jobs and shortages of business opportunities for these “little guys” a new improved system of economics should conceptualize these new developments, recommend and implement the necessary changes to allow the economy to develop under these new conditions. In the Past so called Capitalism and its “trickle-down” Economics succeeded massively in building such economies and markets as the US and Japanese in which rapid and consistent economic growth continued in cases like the US for Centuries; when even interrupted by short recessions the Capitalism always worked out its ways to bring more prosperity by establishing the Middle Class of a plentiful market demand. In Japan, because of  better organization and excessive workforce discipline supported by high education these forces of “trickle-down” Capitalism worked well but in a short term, because since the early Nineties the Deflation and overcapacity has become very difficult and sometime contra-productive indeed, however the Japanese Government has taken and is still taking very precise measures to keep the Japanese market and economy working by pouring Monetary Quantities and by subsidizing exporters, by supporting SMB and the Middle Class, and by keeping the Yen in lower values. What the Japanese have discovered for a long time is that the Capitalism cannot adjust the market Supply-to-Demand balance without Governmental interference, and they learn it well.

However, because of its huge economy and marketplace well developed the US with a few drastic and more technical exceptions like the Great Depression 1929-32 the US never experienced the powerful force of the industrial overcapacity until the time of China entering TWO and of China incredible industrialization and economic growth, and mostly until the last “Great” Recession hit it like a brick, then the US Government started acting by pouring stimulus packages and interfering into finances and business along. The US is very lucky to get decisive and quickly moving administration, because the forces of Economic Upheaval were and are so great that if the Administration did not act so promptly the economic consequences from the incredible Real Estate overcapitalization and overcapacity that provoked huge loss of equity and value in the financial institutions could have been fundamental.

Anyway, what is happening to the US and it could be said to the World already was experienced by Japan starting in the early Nineties for which the reason and the consequences are quite similar, the problem is that Japan was a single very well developed economy with incredible industrial production that could not find enough marketplace, enough market demand to support it, when the US is the marketplace that started losing its strength of Demand because of losing industrial jobs, losing its Middle Class, loosing its Small and Medium Business and Investors ability to access Return on Invested Capital. The system of Capitalism is well based on Industrial Production as a main source for GDP and the following Fiscal Reserves. The system of Capitalism is well working machine promoting Big Money, Big Business and Globalization that works for them: shady business practices supported by lack of personal liability, lack of business laws of contracting, bonding, advertising, high interest rate lending that brings the Capital to a very few, deregulated financial and commodity exchanges that does not allow anyone but them getting to the money.

Small and Medium Businesses and Investors and the Middle Class in such an business environment were well enough when the marketplace was a pro supply, high demand marketplace and thus how 40% of the Global consumption was succeeded by the US, at the same said when the marketplace started lacking demand and the supply went to be on a second place prompted by overcapacity and exodus of industrial production to China that tipped off the demand instead of supply, the economics of trickle-down Capitalism could not anymore provide the economic instruments and economic conditions to deal with such new developments. The Real Estate overcapitalization that brought the last Recession of 2007-2009 was a result of the lack of business opportunities for the Small and Medium Business and Investors that represent the Middle Class, and overall the Recession was prompted by the money coming from them, therefore to deal with or prevent from Recessions, overcapitalizations and lack of Demand an improved economics should be used to maintain the Middle Class, but such could not be succeeded if the foundations of  “trickle-down” pro Demand Capitalism is still ruling.

The rules of the game are to change of practicing Economics and Governments from supporting and promoting Big Business and Big Investors’ concentration of capital to supporting and promoting Small and Medium Business and Investors, and the Middle Class, but for such change of approaches are necessary to change the fundamentals of business laws, contracting, bonding, personal liability of corporate structures and etc. that actions would enhance these entities to stand in courts against their big brothers, and overall will make them more “lend-able”, “finance-able”, the regulated Market Exchanges system would allow these entities to benefit from the ongoing Globalization too.

 However, some additional programs Social, Infrastructural, Financial are needed too that can help maintaining some “Demand-to-Supply” Market Balance nationally and globally by including the Middle Class into the action.
© Joshua Konov,2010

How Globalization affects Countries and Markets


SEE “Market Economy under Rapid Globalization and Rising Productivity” http://ideas.repec.org/p/pra/mprapa/48750.html

“2001 & 2007 Recessions prompted Remaking of The International Organizations”  by Joshua Konov at http://mpra.ub.uni-muenchen.de/34588/

The Paper was approved for the Conference in Chengdu, Chinafrom 29 of June to the 1st of July, 2012 http://riem.swufe.edu.cn/conference/nav/20.html

[PDF

Modern day’s economics encounters conflict between market (market synonyms of economic, economy) growth that could boost employment and the environmental regulations, which are obstacles, adding to high taxation and business regulations such conflict could have serious weakening effect on businesses’ competitive edge. It is so right, because in current relatively low security markets founded on cyclical runoffs and high lending rates, particularly to small businesses and investors, the business competitiveness is negatively affected, a step farther, by additionally imposed environmental rules and regulations. In addition to, the environmentally friendly products average high production prices and high technological machinery prices that make such production quite expensive, indeed. Only subsidies and tax initiatives could help sustain market competitiveness, however, these subsidies and tax breaks are watered down into unproductive artificial market interference in an insecure market, which instead of enhancing the market competition are pushing it down making it totally dependent on such tax breaks and subsidies for their existence.

The global business conditions of many countries running high deficit and accumulating national debt establish highly unlikely conditions to meet the demand for environmentally friendly products and alternative energies anytime soon.

Declining Earth resources prompt energy related inflation, which aggravate the need to maintain consistent economic/market growth in a runoff to survival for developed and developing markets alike. However, the 2007-09 Recession has been followed by anemic rebound of employment and of personal income, contemporaneously causing market imbalance of demand-to-supply high national indebtedness. Easing Interest Rates, Quantitative Easing and Stimulus Packages have decelerated the processes of declining economic indicators, but could not boost market activities to the needed fundamental turn around. Outsourcing and moving of industrial production prompts high unemployment and marginal personal income growth. The inadequate consumption resulted from the declining industrial employment has long lasting negative consequences to the market development. The fundamentals of the trickle down Capitalism lay on relative high lending rates, shady business that benefits large transnational corporations and investors, however, under the new developing market conditions of globalization and rising productivity, of the Chinas that make outsourcing and moving industrial production targeting reduction of expenses much easier, the trickle down approach cannot function appropriately.

In this new global market, small to medium businesses and investors play progressively higher role to create employment, enhance consumption and business activities overall, the current economics empowers large corporations and investors in conflict with what is necessary for market development. The shady business practice and unfair competition might had performed well in a pro supply economies of the past, but cannot ensure needed market development of the presence, and such inadequacy is particularly transparent when it comes to the issues of environment and diminishing Earth resources, which are counter productive and cannot keep up market balance, therefore fiscal indebtedness is in progression.

The question remain: if the Earth environment is so much affected by pollution and the Earth resources are so quickly declining to require prompt action?

Even some scientists and politicians object global warming and fight restrictions on pollutions, there should be no question that our environment should be saved to the maximum in the future, and very rarely someone would object it. However, the economics of Capitalism is industrially based: in meaning, industrial production is considered the highest contributor to the GDP of any developed economy, therefore in times of slow growth and factors that regulate industrial production, limit it too, and while the competition is Global, coming from places with wider opened doors and more flexible regulations, the competitiveness and success of any economy is directly affected by any regulations the particularly environmental ones. Hence, if Environmental protection, environmentally friendly production and alternative energies are to be implemented: it could be done only on an equal base globally, or/and if the system of economics is amended to apprehend these new developments. Any other ways, such cause is “cauza perduta”, and especially in the conditions of slow economic growth.

Subsidies and tax breaks could help environmental protection to a certain point, sure, it could be done only nationally for the most developed economies, but even in there counter market measures of such regulations are politically resisted; these are just very difficult to be implemented when working against the markets.

What kind of economics could adopt Environmental protection, environmentally friendly production and alternative energies into a productive competition?

The Capitalistic economics takes productivity as the main economic tool for growth, thus anything that prompt it is good and anything that slows it is bad for the economy: social, educational and infrastructural expenses are bad, business laws and regulations are bad too, while deregulated and shady business practices, lower taxes for the rich, no social or medical protection and expenses are good.

Well, are all of these the bad, bad or the good, good? – Yes, these are…, but such statement reflects the reality of the modern days Capitalism of industrial production and trickle down capital.

The world history (recent Greece is a perfect example) shows that governments could not manage markets, being inept and inflexible the governments create redundancies and economic upheaval. Only free entrepreneurship and a free market business environment can create market balance, however the 2007-09 Recession was not created by the government’s spending or redundancies, but it was a product of real estate overcapitalization in an economy depressed in any other sectors, which was not growing proportionately. I may bravely concur, that if the US economy in 2007 was growing proportionately in other than the real estate overcapitalization the crash effect of the overcapitalization would have been different.

It becomes obvious that the governments running economies/markets or overcapitalization product of deregulated business could bring very similar consequences.

The productivity as main tool for economic growth runs on a high gear runoffs of industrial production, for which, I believe, is insufficient to steer “noise” in the 1=f noise formula, and in the real life for bringing accelerated business activity and prompt market development (development equals growth). The small and medium businesses and investors have become the main economic agents, in times of high technologies; globalization and rising productivity do spear employment and business activity. However, shady business practices, the lock of international intellectual property protection, the over all high interest rate lending works better for large transnationals and investors, establishing unfair market competition. But, if artificial tools such as tax breaks and subsidies or low interest rate loans only are used to promote fair market competition, the long term results would not be any positive, therefore, some market related and natural for the markets economic agents should be adapted to do it.

Which are these natural for the markets agents and tools that could marginalize the unfairness in market competition and steer the “noise” as an addition to “productivity” to prompt market development and maintain market fluency, and thus raise the market security that will lower lending interest rate?

  • To change limited corporate liability into unlimited
  • To enforce business contract lows
  • To enhance project insurance and bonding requirements
  • To enhance intellectual property protection, globally
  • To enforce equal business laws, globally

These and some other points, I believe, would raise market security, and thus establish relative fair market competition by lowering lending interest rate and accelerating business activities.

After these points are implemented and only then, the role of social, educational and infrastructural expenses (which are considered as artificial for the market agents) should be better comprehended, as partial equity market agents for balancing market’s demand to supply.

But the natural for the market agents should have paramount standing in prompting and maintaining market growth.

The Environmental protection, environmentally friendly production and alternative energies are to be implemented under these new more secure market condition as a main agent for market development, because in a more diverse business climate of accelerated business activities the small and medium businesses and investors  would explore any possibilities for marker exploration; thus, lower taxes and subsidies would have more vivid effect on the market development, indeed.

Joshua Konov, 2012

More Secure Marketplace requires Enhanced Insurance and Bonding by Joshua Konov

As directed in my other articles, it is paramount to enforse markets/economies’ fairness in competition between Small and Medium Enterprises (SME) from one side and the Trans-National Corporations (TNC’s) from another that would empower the SME expansion on the markets. By business diversification, by piercing the corporate veil for the decision making corporate structures and by overall enhancing the weight of business contracts SME would prompt employment and business activities. However, such rising markets security may not be achieved without the new much forceful and empowered role of the insurance and bonding of these contracts and projects to deleveraging risk to the contracting out and the contracted parties. A relatively secure business contract most definitely enhance the overall market security, and thus reduce lending interest rate and other expenses, including but not limited to end the necessities for consultants expertise in case of preparing paperwork for loans, subsidies and tax breaks, and to minimize attorneys’ fees in cases of contract breaches, and e.g.

Under the environment of unlimited liability for the corporate managing structures, the guarantees for issuing of liability insurance and bonding should become easier for the issuing parties, because of, from one side, contracting party (usually larger corporate entities) liability for the proper execution of the contract on a personal for their managers level, and from another side, the contracted party (usually SME) better security of being paid when the contract is properly executed, but also very much the contracted party’s high liability when the contract is somehow improperly executed. In many cases, the insurance companies will require from both entities financial bonding to ensure needed financial coverage in cases of default. Nevertheless, I believe the liability insurance policies, under these relatively new conditions would be much more scrutinizing both contract parties to ensure the needed requirements for coverage, and the details of the contract will be underwritten in much more pre-conditional ways of a setup matrix. In a legal prospective, the business contracts when more secure establish the prejudice of easy enforcement and thus minimize time and resources for specifically SME that usually experience financial limitations. However, the abilities of the insurance companies to waive payments and their flexibilities to limit coverage would be greatly undercut too, thus making their policies more fluent to proper coverage.

The insurance and bonding will greatly contribute to enhance the security of SME under these new market conditions on purely market related principles (not artificially, indeed), that farther would lower lending interest rates to SME and the overall markets financial interactions. The high interest rate’s violent fluctuations particularly affecting SME in an current  environment of globalization and rising productivity, of moving and outsourcing of industrial production and intense global competition is particularly harmful to the SME, the diminishing employment and lack of opportunity for the middle and lower classes, therefore it is paramount any changes of the economic/market approaches to lower the interest rate for lending to SME, which are the main employer under these new conditions, and by using natural for the markets agent and tools of economics to lower lending interest rates that will prevent from market redundancies and artificial negative for the markets deficiencies.

At the moment, the governments in particular the US administration is using mostly artificial to the markets lowering lending interest rate and different program for lending to the SME, by aggregating monetary supply and pouring large amount of cash into the financial sector, the administration is trickling down capital to the SME, however using these approaches the administration is risking to pool up market redundancies and deficiency, because of its artificial for the markets approaches. (it is more like “putting new wine in old wineskins” see related articles of mine). In this paper, the reasons for the 2007-09 recession and some previous recessions are taken in consideration, but instead of a face-lifting approach as used by the administration, micro and macro economic changes and enhancements are suggested that are market related (not artificial, indeed). This research consider natural for the market as the best enhancements that could avoid market redundancies and deficiencies, thus maintaining somehow demand-to-supply market balance.

The insurance and bonding are very much part of these new approaches of micro and macro economic changes to lift-up SME competitiveness, and overall establish a relatively “fair” market competition that will allow more of the so much needed employment, and again on some purely market related principles. SEE Philosophy of Market Economics

Joshua Konov, 2012

Which are the worst current economics’ compatibility points to the present accelerating globalization and rising productivity? By Joshua Konov, 2012

  • Relying on high productivity as main economic/market agent for growth (1/f noise), whereas, many economic/market agents and tools should be considered “noise” to diversify business activities to maintain economic/market development
  • Low economic/market security founded on the shady business practices and lack of rule of law that gives major advantage to the large transnational corporations, and grieving disadvantages to the small and medium businesses
  • High interest rates lending to the small and medium businesses and investors that’s is accumulative in short term cyclical adjustments, and dysfunctional in another way
  • Industrial production as a main and fundamental economic/market agent for fiscal reserves that could have worked-out short term downturns, whereas, well exampled by the last 2007-09 Recession,  the downturns are neither short, nor moderate, and could be followed by long rebuilding term
  • Business cycles as main and fundamental economic/market agent for adjusting economic/market redundancies, whereas the economies/markets fluctuations  are less predictable and cycles progressively untraceable, the economic agents and tools should be used much more random “as it comes, as it goes, instead
  • The trickle-down approach of capital supported by political and fiscal economic/market agents that in the time of China and rising productivities carries on an accelerated wealth concentration into progressively the very few, in large disadvantage to the middle class in national plan, and  less developed economies/markets in global such.
  • Short term investment and capitalization by business practices prompted by the high interest rate lending, and the corporate structures business practices of short term profit and distribution
  • Practiced corporate limited liability laws mainly serving large transnational corporations thus giving to these competitive advantages and lowering market security over all
  • Hurting the earth environment short term investment and capitalization business practices, by the high interest rate landing, by the shady business, by the lack of liability and accountability transnational corporations, by the deepening devising between poor and rich people and countries, by the imposed by the developed countries and the international organizations: WB, IMF, WTO austerity and restructuring measures on the less developed and developing economies
  • The governments growing inept involvement in finances and business actually making the gap between rich and poor wider
  • The bureaucratization of economic/market agents well presented in the European Union VAT and the EU funds for development that prompt corruption, politicization, and injustice
  • The lack of laws preventing market and commodity exchanges from shady transactions and activities that gives market advantage to the large investors, and greatly hurts the small and medium investors
  • Debit/Credit finance accounting, which because of the low economy/market security keeps very tight economic/market development, whereas the transnational corporation are expected to rouse business and raise productivities attracted by lower taxes and unregulated labor marked: the transnationals not only raise money on the public market exchanges but also are credited on very low interest rate, however under these new conditions transnationals cannot maintain or expand industrial production any closer to the global markets needs of employment
  • The pro-supply a priory economics cannot maintain balanced market demand-to-supply under this new emerging markets environment by Joshua Konov, 2012  joshua.konov@gmail.com

SEE http://mpra.ub.uni-muenchen.de/34588/1/MPRA_paper_34588.pdf

2012 Economics “New Wine in Old Wineskins” by Joshua Konov 2012

The ongoing most recent economic success of the USeconomy/market may well be considered consequencual of breaking all rules suggested by the majority of the modern day Economics e.g.

:

  • Counter-austerity measure
  • Direct governmental intervention in business such as AIG and General Motors
  • Expanding unemployment benefits
  • Infrastructural projects expansion
  • Quantitative easing and money printing
  • Directly aiding of the middle class by using programs for lowering interest rate in refinancing,

Instead of enforcing heavy austerity measures and easing business environment to prompt productivity and trickle-down business growth, particularly of the Transnationals that historically most benefit from such governmental interference, the administration exceeded  the Keynesian economics and went into more like total governmental economic/market intervention, indeed.

The Obama’s administration has been acting under the pressure of high unemployment and sharp economic decline contemporaneous of the 2007-2009 Recession, which should be considered emergency circumstances with events prompting immediate action ignoring economic theories of the neo-liberal zeal.

The US political structures compare to the fragmental European Union such, have given more power to the administration to explore unorthodox economic approaches, not being subjected of the scrutiny invoked by the EU national divisions and multiple interests.

Finally, the results were….. good! E.g. in the last Quarter theUSeconomy grew with an exceeding the expectation growth of 2.8%, the unemployment went down to 8.3%, with an overall positive business outlook. Even the declared for destruction US Dollar is coming up, and up, and up?

Simultaneously, the EU’s economic/markets mess is bringing marginal, if any, economic growth, total Fiscal meltdown, while the austerity measures have been methodically enforced, reducing the governmental expanses in all possible sectors of Medicare, infrastructure, administrative, social and education, following the trickle down economics to the point?

 

  • What is wrong with this picture, and why the liberalism failed?
  • Is it the Future, for governments to take over and manage business?
  • What is going to happen in the next recession, how far the governments should take over?
  • Is it any better way out of recession by using free entrepreneurial markets approach?   

Unfortunately, for the theory of liberalism and fortunately for the US Economy, the Administration did not follow economic a priory ideologies, but their sense and the innovative American spirit took over. However, if the inept governmental involvement in business has helped the US to get out the economic/market upheaval of the 2007-2009 Recession, what would happen if the micro and macro economic insufficiencies that provoked the recession in first place had been outlined and fixed…, is it possible anyway?

Maybe, the cyclical downhill that Karl Marx was talking about is unavoidable? Is it anything wrong with the system, anyway?

Until now, the way economies/markets work had been considered somehow predictable, the cyclical recessions were suppose to reduce excessive market redundancies, such as production of excessive goods, exacerbated services and bureaucracy, thus bring economies/markets down to their means of market balance between mostly industrial production and fiscal expenses. Recessions have been considered very important economic tools for adjusting economies/markets to the financial realities, thus not allowing the exacerbations to reach points of total economic/market collapse.

However, the China’s industrialization, aided by overall Globalization and rising Productivity has created economic conditions of deindustrialization of many markets, and non-industrialization of others, which processes have taken on the fundamentals of a priory trickle-down economics by practically establishing global market conditions very new and adverse for expecting recessions to be fixed by self-adjusting economic/market forces. (see: http://mpra.ub.uni-muenchen.de/34588/1/MPRA_paper_34588.pdf)

It is obvious that neither industrial production on a global scale could grow to a point to employ these in the USor EU, or those in the developing markets (China, Vietnam, Brazil, Indiaexcluded, but even there the shrinking industrial labor is in a progress). As it is well established by these papers and articles, the capitalism is founded on industrial production, rising productivity and relatively high interest rate, which fundamentals are counterproductive under these new emerging economic/market conditions (see appointed link)

What differs from the past also is the role Transnationals and Large Investors play and could play under these new emerging economic/market conditions, where the main employment should come from Small and Medium Enterprises, instead, the main wealth distribution should come by market exchanges through Small and Medium Investors, instead it of the Large Investors of the past, and the role Infrastructure and Social Expenses should play, which instead of being pure expenses should partially change into equities.

However, for these different agents and tools of economics to work some micro and macro economic tools may have to change and others to evolve (see: appointed link).

Another way for managing economies/markets is to give governments progressively more power that I consider marginal and incoherent, no third way could be projected, indeed.

By Joshua Konov

http://bx.businessweek.com/market-economy/

Joshua.konov@gmail.com

The Deindustrialization of Many Markets/Economies

By Joshua Konov, 2012

 

The ongoing advances in high technologies that simplify manufacturing, the Internet, and the expanding worldwide intellectualization, which are supported by market globalization and rising productivity, make the process of economic deindustrialization in many markets/economies irreversible. It is not just about Marx’s imperialistic overproduction that prompts such processes, but mostly about the enhancing openness of the global marketplace for direct investment by Transnationals and the enhancing intellectualization of the labor-force that have given immense acceleration of industrial production of China, India and now Vietnam. The role of the Chinese government in promoting and prompting such industrialization by subsidies, tax breaks and technological assistance is very high too. The speed with which production lines were setup, the enhanced infrastructure for shipping goods, the lifted trade barriers, have established market conditions for “limitless” expansion of industrial production in China land; not the least is the internal consumption growth in there too, that makes the conditions there perfect for long term moving and outsourcing of such production, indeed.

 

These processes of flawless industrialization growth particularly of China affects straightforward the rest of the world advanced and developing economies by prompting high deficit and national debt. With the exception of Germany, Japan and the US’s highly industrialized economies that still hold lead in some industrial spheres, all of the rest are struggling to keep up with lowering productivity and harmful fiscal shortages, however even the most advanced economies are not immune from high national debt too.

 

If the markets/economies are reviewed from the prospective of deindustrialization, it is clear that the process of shortening industrial employment is irreversible too. The whole world of high interest rates Capitalism and trickle-down economics of Transnationals and Large Investors superiority is to crumble into constant austerity measures to reducing the middle class and to expanding poverty.

 

Then it comes the possible alternative of socialization of markets/economies and the expanding governmental role in managing businesses and wealth distribution that brings not very positive prospective for the Future, having in mind their inept inflexible managerial abilities.

 

Therefore, “Market Economics using Quantum Factor” argues for changing the role of Small and Medium Enterprises and Investors in the markets/economies through a mostly natural enhanced market/economy security by using micro and macro economic changes. From generally unfair market competition of the trickle-down capitalism that promote Transnationals and Large Investors to a relatively fair market competition of enhanced “Rule of Law in Business” and by establishing a regulated fair market exchanges that allow more secure access to foreign markets/economies. The unnatural/artificial market/economic agent/tools such as social and infrastructural expanses are well taken in consideration under these new market conditions for balancing market’s Demand-to-Supply, however the natural for the markets market/economic agents/tools are preferred to the unnatural/artificial market/economic tools.

 

What the Quantum Factor represents are the random ways market/economic agents/tools are used, instead of the “predictable” cyclical ways of the trickle-down market/economic agents/tools have been used.

 

The deindustrialization of many markets/economies brings the issues of diminishing Fiscal reserves on the front, whereas industrial employment is paid higher, and the lack of it brings the question of the possibilities to maintain and expand an adequate market consumption going along with the ever-rising prices of natural resources and national debt. Under such conditions the suggested impact of “productivity” (noise) in economics that brings the less developed markets/economies to closing the frontiers (most developed markets/economies) also should change into more general diversified business activities that could be brought mostly by the small and medium enterprises and social and infrastructural expenses, the productivity could not be anymore politicized as an excuse for government’s inaction, the neo-liberalism should well be taken off for their poor economic results of the last 20-25 years.   

 

The industrialization of China, India, Vietnam, and e.g. should not be considered as a negative occurrence for prompting deindustrialization of many other markets, but the system of international business should well take in account the irreversibility of this process and establish a relatively fair market competition as mentioned above by raising market security and thus promoting business diversification.

 

In such a context, the global worming and Earth reassures exhaustion should be dealt as additional market/economic agents/tools for business diversification, additional “noise” into the “1/f noise” formula.

 

Inflation is the main and fundamental problem in such economics, whereas the market balance of Demand-to-Supply is paramount, therefore international cooperation and the same rules play is necessary.

 

The scientific detailed exposition of Market Economics using Quantum Factor follows at:

The Imperialism of Economics (or as far you are ok I will sell my stuff to you)

By Joshua Konov, 2011

The European Union was founded as an innovation for unity of many old archenemies in Europe, Britain  against France, France against Germany, and Germany against everyone else…  After the Second World War two main conclusions were made, the first was that by the means of war nothing could be achieved, while the weapons were too sophisticated and powerful that basically can destroy anything on their way, and the second was that the imperialism is more like liability than equity in terms of economic advantage; to occupying someone’s countries can bring more headaches than benefits the occupiers would gain indeed.  Then the Europeans decided to join together into a market and currency union instead…, and they put together the European Union (EU), then the Soviet block disintegrated and more countries like Poland, Latvia, Latvia, and etc. joined the Union too, then most recently Romania and Bulgaria did. Some of the European Union countries adopted the Euro as their currency, other retained their old currencies however pegged the Euro directly like many or indirectly like the Pound. Long trusting governments and bureaucracy, the Europeans established in Brussels political institutions which in parallel with the national governments should draw the EU into closest union: political and economic. The doors for the large manufacturers, wholesalers and retailers mostly German corporations for a no customs duty open marketplace were wide open. The doors for Europeans’ freedom to move through their borders, to find opportunities, i.d. was wide open too. However, what they did not do was the export of the successes in consumer protection, standard of life, pensions, i.d. of Germany and mostly of the Northern most developed Countries of Dania, Sweden, and of France. The bureaucratic  approaches these more developed countries used to help less developed ones have been through subsidizing particular industries, farming and some infrastructure by using governmental structures of highly complex procedures (as an example: more than 75% of all agricultural subsidies went to the 10% of large farmers who basically did not need any such subsidies to be competitive), the many scams of fraudulent return of so called VAT (Value Added Tax) have been so well developed in EU that counted for billions of dollars loss in fiscal reserves (see VALUE-ADDED TAX FRAUD IN THE EUROPEAN UNION). 

The bureaucracy has been adopted very well by some countries like Greece that manipulated such programs to raise its own standard of life, and to create a very large bureaucratic machine itself. Others like Bulgaria could not adopt at all under these new conditions not being able to sustain even its market development inherited from the communist time, However the large Transnational Corporations (TC) were already prepared for such open marketplace and have taken over it in a blink of an eye, becoming the rulers of this universe. They the TC on a side the criminal bosses in the world of the post communist era benefited the most from the corrupted governments in the less developed member countries signing questionable contracts… (example is the interest rates in Bulgaria where banks are lending over 12% up to 18% to individuals and businesses alike, the wireless mobile phone providers are maintaining the highest rates in Europe and the most loose costumer policies elsewhere, the energy wholesalers that are keeping relatively highest prices too, and all of these in a country with no costumer protection, in which first residence could be foreclosed in two months).

 

On top of all of these, the semi legal privatization done by some of these less developed countries allowed robbery in the mid day by those with the money, guess who were those? (example is the privatization of 120 hotels in Bulgaria previously owned by a state own company “Balkanturist” to a criminal founded company owned by Ilja Pavlov (murdered himself) for less than 20M while the appraised value was 3+ billion dollars, or many banks in Bulgaria, Romania and elsewhere that were acquired by Societe Generale and others far under their nominal values..)

 

The European Union basically allowed Transnational Corporations and criminal bosses to take assets in many member and satellite countries in a ways not too far from the methods of imperialism used before the Second War…, thus the consequences of their actions did not differ from these of the old Empires… no development, no progress, no good to the people of these less developed countries, hence, the lack of fairness in market competition and the boost of bureaucratic crime brought market conditions of the neo-liberalism in its full force, that  seemingly reflects what happen to the European Union most recently. The even further disadvantage European Union was presented under the new globalized world and rising productivity in where the lack of well developed marketplace to support the most Developed Germany and France’s production competing to China, Japan and the Unites States… (see Market Economics by Using Quantum Factor) reflects the crisis ongoing in EU.

To change the situation in European Union some general macro and micro economic policies should be adopted, and of consumer protection and fair market competition enhanced while the bureaucracy should be reduced indeed, the subsidies should not go to the rich but to the Small and Medium Enterprises. Governmental bureaucracy channel should not be used but only Commercial banks. The European Union should be a real union of most developed prompting fairness in market competition.

Market Economics Using Quantum Approaches

The number of articles I have written on the subject could be very perplexing for specialists and regular readers alike, because of the complexity of issues evaluated and mostly because of the apprehension of the ideologies have been largely promoted out for centuries, the ideologies that justify the deep division between rich and poor, countries and regions; the Cold War with its profound partition between the ideas of free market entrepreneurship of the Western Block Countries and the government-run economies of the Soviet Block Countries.

It could be well concluded that all together cultures of philosophical schools and religious conceptions have been exploited to smooth these divisions inside countries and set up conditions for unity and normality in life; nationalism, chauvinism, xenophobia and over all “I am better than you are” aptitude have helped countries prosper competing to others, Empires rose and fall alone; and at presence Economic Powers came up into existence.

Most of these historical developments could be greatly explained by the processes of economic progress, because the Economy is a mirror of  History indeed. Over all, the further we go in the past when the means of production were less developed and the individual intellectual involvement was far less productive the bigger division between the having and the having not. And, in the same time the closer to the most recent times, the more middle class participation, the more individual intellectual involvement, and the more enhanced standard of life for the majority. The rise of the technologies, the Internet, the ongoing Global political depolarization and the subsequent Economic Globalization, the ability for investing to another markets not just into the developed part of the Western World for substantial ROI (Return On Invested) capital, had brought general economic explosion of the 1990’s, but also these brought the economic upheaval of the 1999 Stock Exchange Crash, and the most recent Great Recession of 2007.

    • (Reuters) – Societies should not rely on market forces to protect the environment or provide quality health care for all citizens, a winner of the 2007 Nobel Prize for economics said on Monday. http://www.reuters.com/article/idUSN1…

The existing economic and social structures of (I call it) Social Order that was well perfected by the Most Developed Western Economies which is pro supply by nature of more or less trickle-down economics with relatively high lending rates (the set by the Most Developed Economies’ Governments low almost to 0% internal interest rates do not affect that much the inter-countries lending rates nor this do to the majority of the Worlds’ Small and Medium Businesses where these rates are rather higher than before the Last Recession: see the interest rates of the securities sold by Greece, Ireland, Portugal, Spain, or see the rates Small and Medium Businesses are borrowing in the US). The Capitalistic trickle-down economics is based on a relatively shady Business Practices maintained to prompt “easy business” which under the most recent conditions allows better and faster concentration of capital which effect does not result a possible on the US marketplace business expansion but instead this effect consequences of high growth of and profitable ROI from some Developing Countries than from the US;

The “shady” business practices in which laws and regulations are far from the perfected common laws generally allow easy businesses start-up but then the “security” of these start-ups is quite limited to let lower interest lending, nor the Small and Medium Businesses have easy chances to collect on contracts from their Big Brothers’ Intercontinental Corporations by lengthy court cases, and finally when they (SMB) outsource or move any production to elsewhere trying to stay competitive globally these Small and Medium Businesses easily become a prey of weak international laws for intellectual property and anti damping protection, therefore it could be easily concluded that in the most recent times and under the most recent economic conditions the system of Social Order works better for the Large Transnational Corporations than it does for the Small and Medium Businesses, also the same formula could be well applied to how Global investment affects Large Investors and Small to Medium Investors; the lack of proper Personal Liability Laws and Regulations on National and International levels of Stock, Money and Commodity Exchanges benefit mostly the Large Investors by lowering substantially the security of investment for the Small and Medium Investors.

  • China Releases Scheme to Support Micro and Small-Sized Enterprises

    Aug. 31 – China’s State Council released the “Scheme on Division of Work for Key Authorities to Further Support the Healthy Development of Micro and Small-Sized Enterprises (MSEs) (guobanhan [2012] No.141, hereinafter referred to as the ‘Scheme’)” on August 2, containing 75 working items and involving more than 10 governmental authorities. The key information of the Scheme can be found below.

    Further strengthening financial and tax support to MSEs

    • The total scale of special funds for MSEs has been expanded from RMB12.87 billion to RMB14.17 billion in 2012, and will be increased annually. (handled by Ministry of Finance)
    • A central finance committee will allocate RMB15 billion to the Development Fund of MSEs on a five-year basis, and RMB3 billion will be contributed to the fund in 2012. (Handled by Ministry of Finance, Ministry of Industry and Information Technology, Development and Reform Commission, and Ministry of Science and Technology)

    Making efforts to relieve MSEs from difficulties in financing

    • Implementing various financial policies to support the development of MSEs
    • Expanding financing channels
    • Expediting the development of small financial institutions
    • Strengthening the credit guarantee service for MSEs
    • Regulating the financing services provided to MSEs

    Promoting the innovation development and structure adjustment of MSEs

    • Supporting the technical transformation of MSEs
    • Improving the innovation capacity of MSEs
    • Improving the capacity of inventing, utilizing, protecting and managing the intellectual property of MSEs
    • Supporting the development of innovation-oriented, entrepreneurial and labor-intensive MSEs
    • Expanding the scope for private investment
    • Accelerating the elimination of backward capacity

    Intensifying support to the market exploration of MSEs

    • Innovating the marketing and business mode
    • Improving custom clearance services
    • Simplifying the formalities for domestic sales of processing trade
    • Implementing the pilot mode of bonded regulatory control on integrated circuit industry chains

    Assisting MSEs to improve their the operation and management levels

    • Supporting management innovation
    • Improving quality management levels
    • Strengthening human resource development
    • Formulating and improving polices to encourage college graduates to find employment in MSEs

    Facilitating the cluster development of MSEs

    • Arranging the land for industrial cluster development
    • Improving the environment for the cluster development of MSEs

    Intensifying public service provided to MSEs

    By 2015, 4,000 public service platforms will be established and improved to serve MSEs and priority will be given to cultivate and select 500 demonstration platforms of public service. (Handled by Ministry of Industry and Information, Ministry of Science and Technology, Ministry of Commerce, and National Bureau of Quality Inspection).

  • (Reuters) – Global regulators are split over which electronic platforms can trade derivatives to improve transparency, raising the prospect of banks shifting business in the $600 trillion sector to less restrictive countries.

How The US Government Used Unconventional Methods to Succeed Higher Growth?

When pro-supply trickle-down economists make  evaluation of the economic actions of Mr.Obamas’ government, rather an immanent economic crash should be hitting America at the moment with very high inflation and total collapse of the US currency value;

The more than $14 Trillion National Dept;

The Medicare Bill that expanded the money spent for Medicare a few times;

The Billions of Dollars injected into Banking, Real Estate, Business and Social Sector

The Trillion Dollars that is been used for Quantitative Easing, or printed by the Government.

So, what happen in reality that instead of total collapse of the US economy somehow it maintains economic relative growth of recent momentum, and the dollar value has a relative height?

The answer of these obvious conflict could be called absurd consequences to the actions of the President Obama’s government and the real economic indicators may well lay into the question:

How little current ‘Science’ of Economics apprehends the real meaning of Money, Deficit, Industrial Production, Globalization, and etc.? It also may well show, how chaotically and politically motivated most Economists are by choking on old theories of trickle-down economics or Keynesian monetary injections when in the foundation of the recent ongoing Globalization and ever rising Productivity these economic old approaches work less and less.

When Democracy, Liberty and Personal Freedoms have been associated from the time of Adam Smith as precondition for economic development, than why China has been running constant economic growth even being a totalitarian government?

Why many countries in Europe, Latin America such as Bulgaria, Spain, Greece and etc. that are democratically governed and have relative preconditions for economic development and growth instead are falling into constant fiscal shortages, high national debt and economic recessions?

Why even some Most Developed Countries as UK, France and even some Scandinavian ones are running very narrow growth if any, constant fiscal shortages and economic disarray?

When balancing Budgets and avoiding Deficit and National Debt is considered a precondition for Economic Growth?

Why in EU (excluding the German Economy which growth is most definitely based on its export of high-tech machinery to China) most of the rest are running high National debt even when the EU pressure on these countries government made them cut on their budgets to the bone?

Why the austerity measure imposed by the EU and the World Bank on the EU and many other countries around the world have not produce any economic growth?

Thus, the US government interference with the trickle-down economics of capitalism which policies were cursed by leading economists forecasting high inflation and devaluation of the dollar instead brought higher economic growth to the US economy and a relatively high value of the dollar, when the EU austerity measures and  strictly following these trickle-down economics of capitalism brought only misery.

Chinese economy by all means and predictions done by many leading economists was supposed to stall because of the lack of Political Freedom and Personal Liberty instead is growing faster than ever.

I will compare the situation of such inconsistence between what many economists are obviously experiencing with the reality that predicted the end of the world when the currencies were not anymore pegged to Gold or other precious metals, or to the same economists when crying high for an end of the world when the modern world economies were changing from Farming to Industrial Production..!?Well, I suggest the conservative and so well standing preachers of trickle-down economics wake-up see the reality of a new Market Economy that is a product of the ongoing Globalization and ever rising Productivity, of China, Brazil, India and Vietnam in which the Industrial Production based economy is changing into something different I called Marketism Economy ruled by random economic fluctuations instead of the preached dialectic self-adjusting trickle-down economics.

It may be noticed with great certainty that the Social Order (a system classified under the conditions of national, regional or ideological interests)  of the so-called Capitalism is more in favor of Big Transnational Corporations and Large Investors than of their smaller brothers Small and Medium Businesses and Investors. Well, if such Social Order had worked well under a pro-supply conditions of a less connected and less developed world of the past, under the most recent ongoing Globalization and ever rising Productivity such approaches are becoming quite conterproductive by their fundamentals to prompt a consistent economic growth and development:

First, when Small and Medium Businesses and Investors add more than 75% in the US employment and consumption, and the industrial production by the Transnational Corporation has been gradually moved and outsourced to China and elsewhere;

Second, when Large Investors have gradually moved their investing to these Far Eastern Markets where the ROI and the economic prospective are more advance than these in the US;

Third, when in a Global prospective, there could be considered impossible for all regions in US and all countries in the World to enhance their Industrial Production to support in order to properly enhance their Fiscal Reserves for handling their ever getting older population, required by the economics of Capitalism approach. It is obvious that high interest inter-countries lending, the high rate securities controlled by the World Bank and IMF is beyond regressive for these underdeveloped economies ,

and

Fourth, may be the most important. The diminishing Earth resources and the disastrous Global Worming may not and cannot be addressed, if the division between rich and poor people, regions, and countries is not overtaken by some new approaches in Economics. In less developed and developing markets the usage of old cars, means of primitive heating, uncontrolled wood cutting, uncontrolled usage of pesticides and etc. may well destroy this Earth much faster than it is expected. Thus, to address these issues a better system of Economics should be used that may accommodate and use flexible approaches.

So, even when the Capitalism or the Social-Capitalism or the Communism systems of Economics which all represent the “Social Order” of the past claim to comprehensively deal with Market Economics, it must be easy to prove that under the new Global market conditions none of these or any combinations of them could properly be called Market Economics: any economics of so-called Social Order is based on the philosophy of cyclical dialectic development that rely on the market economy to fix by itself when market fluctuations of recessions and upheavals occur, which approaches could have worked out in a pro-supply marketplace, but experience real difficulties in a Global ever rising Productivity marketplace; the last Recession, the stalled industrial employees income diminishing Middle Class for the last 10 years in the US;

    • http://blogs.wsj.com/economics/2011/0… Nearly a year and a half into the economic recovery, some 43.6 million Americans continued to rely on food stamps in November. More than 14% of the population drew food stamps in November to purchase groceries as high unemployment and muted wage growth crimped budgets. The number of recipients was up 0.9% from October, according to the new report by the U.S. Department of Agriculture. Compared
    • “The income numbers for Americans reflect this slowdown in growth. From 1947 to 1973 — a period of just 26 years — inflation-adjusted median income in the United States more than doubled. But in the 31 years from 1973 to 2004, it rose only 22 percent. And, over the last decade, it actually declined.”
    • The gross domestic product here — the total value of all goods and services — has recovered from the recession better than in Britain, Germany, Japan or Russia. Yet a greatly shrunken group of American workers, working harder and more efficiently, is producing these goods and services. http://www.nytimes.com/2011/01/19/bus…

The setback in the European Union where maybe only Germany is doing relatively well and it is because of the German export to China of high-tech machinery, most of other countries are experiencing tremendous economic stress and are literally reducing their once succeeded higher standard of life: their social security, pension funds, Medicare instead of being enhanced and improved is losing quality because of Fiscal shortages;

U.K. Delivers Business-Friendly Budget LONDON—Britain’s Treasury Chief George Osborne delivered a largely business-friendly budget that aimed to dull the pain of belt-tightening and high inflation rates, after already having set the U.K. on a course of aggressive deficit cutting.

Mr. Osborne also announced Wednesday a series of measures to lift economic growth, which he said would be slower than expected when he began the deficit-reduction course—among the most aggressive of the major economies.

“The budget is roughly neutral and won’t alter the economic outlook significantly, but I don’t think he needed to do that, as fiscal plans were set a year ago,” said Michael Saunders, a U.K. economist at Citigroup.


  • ECONOMY
  • European Leaders Expand Bailout Fund

    Capacity of fund, formally called the European Financial Stability Facility, increases from about $350 billion to more than $600 billion

    Full story »

    Submitted on 2010/10/22 at 4:38 pm

    –U.K. Budget Debate: Paul Krugman is critical of the budget austerity in the U.K. “The British government’s plan is bold, say the pundits — and so it is. But it boldly goes in exactly the wrong direction. It would cut government employment by 490,000 workers — the equivalent of almost three million layoffs in the United States — at a time when the private sector is in no position to provide alternative employment. It would slash spending at a time when private demand isn’t at all ready to take up the slack. Why is the British government doing this? The real reason has a lot to do with ideology: the Tories are using the deficit as an excuse to downsize the welfare state. But the official rationale is that there is no alternative… What happens now? Maybe Britain will get lucky, and something will come along to rescue the economy. But the best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump. As always, those who refuse to learn from the past are doomed to repeat it.”

    Capital

  • Officials at the commission and the European Central Bank have for some time called for wage-setting mechanisms to allow more wage “flexibility.” That means wages in countries with high unemployment should be allowed to fall to levels that lead to increases in employment, and businesses should be able to adjust their labor costs to productivity levels.
  • Germany is the only G7 economy whose share of world exports has not fallen since 2000, despite Chinese competition. An increase in net exports has accounted for no less than two-thirds of Germany’s total GDP growth over the past decade, far more than any other big economy. Net exports accounted for half of Japan’s GDP growth and only about one-tenth of China’s.
  • The debt-strapped country agreed to implement unprecedented austerity measures and unpopular structural reforms that are reviewed every three months in exchange for the €110 billion bailout inked with the IMF, commission and EU in May 2010, to stave off certain insolvency. The new funds are critical because January revenues flagged despite being in surplus. The country essentially has no other….

First, it comes China which succeeded in maintaining high growth and withstand the Recession of 2006 by expanding their own marketplace and export even under not very favorable economic conditions: China has done it and is doing it just because the flexibility with which the Chinese authorities use the economic instruments to maintain growth is very proper, the balance between social and infrastructural policies for employment and private sector, the prompt action when the real estate market was overheating last year by regulating second house lending matrix a developers specula regulations (2009), the constantly adapted policies of subsidizing exporters and certain economic areas (the photovoltaic equipment as an example), the policies of equity enhancement and values, and the etc. showed that the Chinese approaches are the best in the World now days, and such accomplishments showed to everyone that politics and economics under the most recent economic developments are two separate issues to deal with, and showed that Karl Marx, Adam Smith, John Stuart Mill, and etc. are dead wrong in how the economy works under these most recent economic conditions of the Globalizing and high Productivity marketplace.

“China’s growth is felt in nearly every corner of the globe—in ways not always welcome. Its rise as a trading power is reshaping other economies, shifting national business models from manufacturing back to raw materials, pushing currencies in sometimes unwanted directions and prompting worries about wages in the U.S.”

[CHINAGDP]
    • “Economy Minister Kaoru Yosano put the issue of China’s growing economic clout growth in a positive light, saying that its high growth rate benefits all of Asia. “We are pleased to see China’s economy rapidly developing,” he said in comments to reporters soon after the figures were announced.A rebound can come none too soon for Japanese workers. Smaller winter bonuses dragged down earnings late last year. The jobless rate hovers around 5% as firms hesitate to ramp up hiring, except for contract positions that pay less and offer fewer benefits.”
    • BEIJING—China’s current and capital account surpluses both rose in 2010, the country’s foreign-exchange regulator said Monday, highlighting the challenges China still faces to reduce imbalances with the rest of the world. Taken together, the twin surpluses give an indication of total money inflows into the economy, which add to China’s foreign-exchange reserves. China’s central bank purchases the incoming foreign exchange with newly issued yuan, thus swelling the domestic money supply and adding to inflation pressures. China acquired $471.7 billion of international reserves in 2010, the State Administration of Foreign Exchange said in a statement, up 18% from 2009’s increase, indicating inflows into the country remain huge, as does its intervention in foreign-exchange markets to hold down the yuan exchange rate.”
    • “Bubbles and manias, followed by crashes and hangovers, seem endemic to capitalism. The Wall Street overhaul enacted last year hopes to blunt the impact of such boom-and-bust cycles — by reining in the use of exotic financial instruments, better supervising big banks and limiting the damage if one of them fails. http://economix.blogs.nytimes.com/201…
  • Second, no one ever really philosophically explained how the lack of resources and the Global worming could be dealt with, under the Social Order conditions in an open marketplace, because never in History the people were given the opportunity or more exact had the abilities to produce more industrial goods then they consume (because by China, India, Brazil joining the Most Industrialized Economies of the US, Japan, Germany such capability for industrial goods is just very high) and at the same time the exhausting Earth resources are pushing toward Alternative Energies and Very High Technologies, and at the same time any countries, but very few in the World, succeeded an Industrial Production to make up GNP, Fiscal Reserves and so on. Even the “Social Order” systems of Economics, in one way or the other, proclaim the Market Economics as their best; none of them really deals with the most recent market fluctuations by using their established system of economics; so when under the pressures of the last Recession many governments took monetary and fiscal actions to stimulate their economies, which they still continue doing it, these actions include taking off debt from Banks and Large Financial Institution, partially acquiring businesses as it happen with GM, and printing money and quantitative easing as they are doing now; actually what the governments were doing is interfering with the market forces to prevent their economies from collapsing, and at least for the moment they are succeeding, but what they are mostly doing is braking with the philosophy of cyclical dialectic economics of the trickle-down capitalism to not relying on the cyclical dialectic forces of the market to fix the mess of the consequences from the last real estate over-capitalization that brought the Recession of 2006. The Keynesian approach of financial market interference that also was used in the Great Depression, lately, it was well extended by the actions taken to points well beyond Keynesian imaginations and limits. When from Microeconomic prospective: “The cost-push theory basically emphasized the role of excessive increases in wages relative to productivity increases as a cause of inflation, whereas the demand-pull theory tended to attribute inflation more to excess demand in the goods market caused by expansion of the money supply.[1]” non of the conceptions can explain the total disruption result of extensive moving and outsourcing of industrial production and outflow of capital to other parts of the world. Neither Thomas Robert Malthus [2] nor John Maynard Keynes [3] neither most modern economists could or even like to explain an employment shortage not founded on economic development in a particular market economy being replaced by a quickly globalizing marketplace where industrial production went so far out of hand that the question of balancing wages to employment to inflation is cut short of industrial employment, which, as it seems becomes in shortage, not just because of the ever improving high technologies, but even farther, it becomes such, because the majority of industrial employment is moved and outsourced indeed. Thus the questions from Micro and Macro Economic prospective are beyond existing logic in current economics. The question about inflation started relating more the value of the US Dollar to the Yuan, and the real costumer consumption when the costumer may not have a job in industrial production, when in the same time GDP is founded predominantly on industrial production. Thus, in an economic environment of exploding supply enforced by the new industrial powers in a marketplace of shortening industrial employment for the rest of the world, and reducing industrial employment for even some most developed industrial economies the questions about employment, fiscal policies, distribution and redistribution of wealth are taking more power than ever, if ever, in History, so the questions become…. with depleting industrial production in the US marketplace and almost everywhere: ·
  • How to manage inflation without industrial production growth? ·
  • How to keep up and enhance consumption related growth when unemployment is high and may get higher? ·
  • How to manage Fiscal policies and Monetary quantities without industrial production growth? ·
  • What is this new world that changed one time from Farming into Industrial Production, and now what change is coming?
  • Why and what China is doing better to keep up high economic growth when the rest of the world crawls? ·
  • Why such a good world as the US Economy which with a few exceptions had grown for the last 100 years with at least 20% every 10 years in case has stalled for the last 10 (2000 – 2010)? ·
  • Why the hard-working and with the highest in the world productivity US workers are running short of jobs and how far it would go? ·
  • Etc.?

Actually, let me suggest what is happening and to where things in economy in the US and almost everywhere else may go to: · The Economics of trickle-down Capitalism may have to change (to evolve) to a Market related Economics of variances (I call) Quantum Economics which promotes the ideas of prompt, practical, flexible economic actions, to prevent violent economic fluctuations such as the Last Recession of 2006, Inflation and deflation; · With the self-adjusting Economics gone, economic instruments/tools may be used “as it comes as it goes” approach of pure statistical principles; · The ideological approaches of Republicans against Democrats of how to run the economy may still be in place, but it will be much less intrusive to how the economy is run, because it maybe much clearer the principle system of the Science of Economics as a system of adjusting market fluctuations by using old and some new Instruments of Economics; · Social and Medicare expenses, Infrastructural expenses along with Subsidies for Alternative Energies may have to be considered more on the equity side (in certain percentage) of the governmental books not on the expenses side as it has been practiced until now, which also may have to be considered Instruments of Economics. 

The Industrial production US Economy is about to continue changing into a Service Sector Economy, but the already succeeded equity including over all standard of life, Social and Medical Structures, Infrastructures, Educational System, relatively high valued Real Estate and the accumulated Capital may have to play important role in a more regulated Stock and other Exchanges for investment into less developed areas in the US as well Globally by the Small and Medium Investors who now are handy caped by the hostile to them market exchanges; · The business laws and regulations may have to be enhanced for corporate, limited liability and trust management that must improve their security for lower rates “lend-ability” of Small and Medium Businesses, that must prompt more employment in different spheres of business; · The Government may have to start using better tools to subsidize and prompt growth; tax breaks, tax initiatives, employment stimulus, and etc. are part of these; · Internationally, the government may have to promote equal laws and regulations to these on the US market.

The Social Order of the Past may be changing into the Market Order of the Present and the faster these new developments are adapted by an economy the better this economy will stand globally. There maybe countries and economies losing their superiority over others and we must really hope the USA is not one of them. As stated above Personal Freedoms, Democracy, Liberties are not necessary preconditions to bring and support the best and most advance economies, because the game has changed, however the values of these succeeded extremely important accomplishments of Humanity must be preserved in any cause. http://sites.google.com/site/economicsofmarket/ © Joshua Konov, 2011


[1]“Macroeconomics,” Microsoft® Encarta® Encyclopedia 99. © 1993-1998 Microsoft Corporation. All rights reserved.
[2]“Macroeconomics,” Microsoft® Encarta® Encyclopedia 99. © 1993-1998 Microsoft Corporation. All rights reserved.
[3]“Macroeconomics,” Microsoft® Encarta® Encyclopedia 99. © 1993-1998 Microsoft Corporation. All rights reserved.
 
 

Quantum Economics – Philosophy of the Economy

by Joshua Konov

The philosophical comparison of social developments: such as economy to the particle related quantum mechanics may look incidental or incoherent, but conceptionally said the human perception has changed from certainty and simplicity to uncertainty and complexity, too. Therefore,  the perception of principle understanding processes in economy, philosophically, must change, too; the way it has changed in Physics and Mathematics , because the “uncertainty” of the information for particles in their “position” and “momentum” goes much farther in social sciences where the “uncertainty” of the social-economic developments and processes as reported by Governments or private groups are even more unclear and subjective. The similarity of the old “certain” and “simplified” approaches in Physics where particles were taken as measurable and static was well used in Philosophy and Economics where the processes were simplified and taken as measurable or at least easily put in systems of evaluation; thus there is not difference between the approaches in Physics and Economics in terms of thought and conventionalizing of simplifying processes and what in science seems irreversible is the constant conventionalizing complex reality. More “uncertainty” must go in the same way and apply to Philosophy and Economics as well.

The similarities between science in Physics and Economics goes even beyond the evolving perception from simplicity to complexity into the reality of realization of “unpredictability” and “uncertainty” when the same way when in Physics was realized that a “particle” is in constant change that there isn’t way it could be measured without error. It isn’t just because of the insufficiency of the human technology but because of multiple and mutually changing realities and even farther because the reality is extremely unpredictable and unknown. The same way in Philosophy and Economics could be easily realized that social economic processes are not static but “unpredictability” and “uncertainty” of ever changing social economic realities are not measurable by any means therefore to think that by using a few statistical measurements might give us a realistic picture of the economic situations is unrealistic and uncertain but even beyond the processes in social and economic structures are so diverse and changing that they are more like the particles in quantum mechanics then to any theoretical explanations of the statistic economics or principle of evaluations of Philosophical conceptions such as Marx’s or John Lodge’s or whoever’s. The ever changing reality and the uncertainty coming out of it may only be theoretically explained by some theories and philosophical conceptions but these could not provide an adequate picture of the ever changing and uncertain social-economic reality in which especially economic processes are at the most unpredictable and uncertain. The ideologies of some economic structures such as Communism or Capitalism, or Socialism which are conventionalized based on philosophical conceptions are far away from explaining the social-economic processes but more likely they are providing some “security” in a very diverse and insecure realities; these ideologies did work somehow in a political world of cold wars and ideological confrontations when one was better then the others, but do not work in an open free world where these philosophical conceptions do not find any applications or support.

To measure statistically or anyhow a realistic picture of the social-economic processes is uncertain the developed tools and indicators for such measuring are inadequate and limited but even they were developed to perfection they still would not be able to measure these processes because the processes by themselves are uncertain and could not be measured.

The processes in social-economics could be only given “parameters of expansion or contraction” so they can develop in “certain areas” to “certain extend” and then changed or adjusted, it may be done in a way to disperse accumulating energy so instead of big wave: the ways energies are accumulated and create big waves is the example of Real Estate market appreciation: which is positive for the economy to the extend of providing additional capital and equity thus expanding individual capitalization and investing but as we saw in the current crisis when this process of appreciation expanded over its positive for the economy effect such over appreciation had devastating consequences to literally crashing the existed economic structures; the negative accumulation of energies because of the over appreciation wasn’t dispersed to the rest of the economy so the ripple effect was unavoidable; in case a possible way to minimize such over-appreciation is not by not allowing or even limiting appreciation as all but by establishing “parameters” which will ring the bell for over-appreciations or even better they will automatically trigger “prevention valves” to limit the over-appreciation or under-appreciation as well.

The differences between the self-adjusting so called capitalism or socialism economics where governments use very political tools to adjust these fluctuations; as well Fiscal and Monetary policies and talk about distribution and redistribution of wealth or limiting or expanding business activities may not necessary be the right economic tools to set the needed “parameters” so “over expansion” or “under expansion” do not occur.

The “Iquanta” is a quanta but is not anymore a part of a particle or an energy, or any thing in physical aspect but a philosophical measured quantity of “energy” or just a “word” which could be considered as an abstraction or an “imaginary particle” as well, it will depend from the point of view: when some could believe that social-economic processes have their own energies or some not; for me such believes do not have any meaning because the most important thing is going to be to establish the parameters of it; The same principles would apply to “Iglued plasma” and some others terminology taken from the Quantum Mechanics which will be used in this research.

This research is attempting to challenge the status quo of the ideologically motivated Philosophy and Economics with the principle of uncertainty of the processes of economic development; to show the similarities existing between the Quantum Mechanics of Physics and the Iquantum Economics of Social-Economics Philosophy; to set some “parameters” of social-economic processes which eventually could be used in practical Economics to limit “big waves” of economic recessions or at least explain these “parameters.”

To show that even unpredictable by nature and impossible to be put into one philosophical structure which could explain all of these social-economic processes, though there are still some parameters which could limit the occurrence of big wave and not the least to show that economic downturns and recessions even uncontrollable are not a part or a tool of somehow “free market development”, but the violent adjustments are a result of occasional build up of energies to a big wave and in the same time some of these energies could be put in parameters /diversified thus it may prevent these big waves from being so frequent or so violent.

What is an iquanta? – it is not a part of any particle it might be part of energies or part of conceptional particles for explaining certain philosophical conceptions which particles move, contract and expand in limited predictability. It is influenced by social-economic processes and developments. It accumulates energies mostly based on social-economic occurrences and fluctuations.

What is igloued plasma?- the powers which connect the iquantas and other parts of a constantly changing and moving occurrences and processes in social-economic processes; we can imagine these terminology as a mirror of these social-economic processes so thus they could be located in their changes and explained in their changes, vibrations, accumulation of energies and creating violent social-economic adjustments. The physical quantities are built up by iquantas and other parts rapidly changing and moving, where the igloued plasma connects these parts and gives them the meaning of occurrence; the “energies” build up by the acceleration of the iquantas and other parts and the fluent economic developments become violent big waves: similar to the monster waves in the ocean. Well, common qualities of such build up is concentration of energies between the neighboring waves but this observation is not a principle. In real development of the economies some factors have positive effect over expansion and progress in certain time and the same factors might have negative effect in different time or mostly when passing the level of a positive build up: (for example the real estate appreciation has a positive effect on the economic development to the extent when the market prices are not supported by income to expanse ratios, or until the withdrawn and reinvested capital do not bring the supporting profit flow; or until becomes exuberant compared to the other business activities or if etc.), many variety of conditions hence if particular waves in the physical quantities relate the real estate built energies which might push up the big wave and this wave might well shake a lot of other sections of the real economy.

So comes the difference between quantum mechanics and iquantum economics: the uncertainty of observation of the iphysical quantities do not relate only ever changing realities but also the ways of observations when in the quantum mechanics the main issue is measuring and observing in the iquantum economics is putting parameters after analyzing of the information when the difference between iphysical quantities and final observations are even greater hence the vectors may start from the same or even totally opposite points so the relevance between and among these vectors is based on their directions, length and the angles of their projections.

The founding formula in explaining the existed uncertainties in the social economic development and processes is

A³Ai

(/Ai/ at one possible statistical or anyhow observation of current social-economic developments and processes)
A is the imaginable real “iphysical quantities” which has its /X,P/ ( /X/ Momentum and /P/ Position) so

X,P ³Ai

X,P»A³Ai

Mathematically:
|A/

Article Source: http://EzineArticles.com/2444461

01-21-2011 08:36
 
 
  • Joshua Konov – economics

    How Globalization affects Countries & Markets


    ____________________________

    This is ongoing – updated article/blog reflecting ever changing Global Marketplace and some individual countries’ economies

    _________________________________________________

    While the markets are becoming more globalized and productivity is being propelled by ever improving high technologies, some economies as Chinese and Indian are growing rapidly thus becoming real powers in industrial production, however the old “science” of Western Economics is changing very slowly not being able to conceptualize these undergoing changes. The “old” system of Economics firmly believes that:


    The Treadmill of Production (ToP) is a theoretical model developed by Allan Schnaiberg, which offers an explanation of the expansion of environmental problems in the modern era. According to the ToP model, advances in technology, primarily induced by owners of the means of production seeking to increase profits, drive the expansion of production and consumption synergistically. This process leads to a cycle of production necessitating more production, because all sectors of society (the state, organized labor, and private capital) depend on continued economic growth to solve problems, such as unemployment generated by mechanization, which are created by growth itself. ToP theorists argue that environmental problems cannot be solved in such a system, since growth puts ever-increasing demands on the environment by extracting natural resources and pollution. Thus, achieving environmental sustainability requires radical restructuring of the political economy and a move away from growth dependence.
    Further Reading
    • Schnaiberg, Allan. 1980. The Environment: From Surplus to Scarcity. New York: Oxford University Press. ISBN: 019502611X
    • Schnaiberg, Allan and Kenneth A. Gould. 1994. Environment and Society: The Enduring Conflict. New York: St. Martin’s Press. ISBN: 0312102666


    “The main motivations for the rapid expansion of multinational activity are as follows: Higher profits and a stronger position and market access in global markets Reduced technological barriers to movement of goods, services and factors of production Cost considerations – a desire to shift production to countries with lower unit labour costs Forward vertical integration (e.g. establishing production platforms in low cost countries where intermediate products can be made into finished products at lower cost) Avoidance of transportation costs and avoidance of tariff and non-tariff barriers Extending product life-cycles by producing and marketing products in new countries The urge to merge – the financial incentives created by the global deregulation of capital markets is making it easier to achieve acquisitions and mergers and thereby encouraging the external growth of a business”
  • Nobel economics winner says market forces flawed: In its statement with the award, the Royal Swedish Academy of Sciences said the market’s efficiency may be undermined because consumers are not perfectly informed, competition is not completely free, and “privately desirable production and consumption may generate social costs and benefits.””Markets work well with goods that economists call private goods” like cars or other consumer durables, Maskin said in his office at the Institute for Advanced Study in Princeton, New Jersey.”If I buy a car, I use the car, you don’t and the market for cars works pretty well. But there are many other sorts of goods, often very important goods, which are not provided well through the market. Often, these go under the heading of public goods,” he said.”How do we ensure in the case of public goods that they are provided at all, and that they are provided at the right level, taking into account citizens’ preferences?” he said.A clean environment, for example, is not a private good in that “my enjoyment of it doesn’t preclude yours,” he said.”So the theory of mechanism design asks what sort of procedures or mechanisms or institutions could be put in place which allow us to choose the right level,” he said.Those mechanisms could include taxes to allow the more efficient provision of public goods, he said.

  • The Rule of Law in Business

    From generations the rule of common law does not apply to business in its force and clarity, because it is considered counterproductive for providing most adequate conditions for business to grow up. Business environment should be foggy and deregulated for economy to prosper was considered. Unless in the Common Law where clarity was main priority in Business Law the opportunism was its main priority. The ideas about the role of “the rule of law” differs:


    “Not surprising, people disagree a great deal about how many laws (and what sort of laws) are just right. For example, liberals tend to think we need lots of laws to control corporations, to protect minorities, to protect the environment and to provide social goods. As another example, while American conservatives claim they are for “small government”, they tend to want more laws limiting things such as sex, drugs and various personal liberties they disagree with. This nicely matches the guiding “principle” of most people is “people should do what I want and not do what I do not want them to do.” So, people tend to favor many laws against what they dislike and many laws for what they like. They tend to be against laws that are for what they are against and against what they are for.”


    For businesses an environment of “do not see do not say” with limited business laws is considered the best. Policies of “easy business” are widespread: “Jun 1, 2010 

    Cameron announces his initiative for change. Picture: Andrew Yates/Getty In his first speech as Prime Minister, David Cameron promised to aid companies by cutting red tape, improving the speed of business start-ups and kick starting bank lending.” Cameron’s speech reflected the plans for businesses laid out in a new document, which was released last week in partnership with the Liberal Democrats. In the document, the coalition government promised to introduce a one-in-one-out rule, whereby no piece of new regulation would be introduced without the exit of another. It also stated it would find a practical method of making small business rate relief automatic and would aim to level the playing field between small and large retailers, by enabling local councils to take into account competition laws whilst drawing up plans to shape new retail development. The government added it would make the UK one of the fastest countries in the world to set up a new business and would end the ‘gold-plating’ of EU rules, so that British companies would no longer be at a disadvantage against their EU competitors.” 


    Any experienced business attorney can tell you countless stories of corporate management getting away with fraud and not paying on contracts; whole schemes of how to trick the system and avoid legal actions are developed in details: the limited liability of corporate, trust and other organizations are craftily exploited and are examples of this philosophy; countless fake offers on the Internet, through junk mail or even on TV are coming from happy “honest” executives and advertisers with offers for easy money and immanent success, if we buy their product, follow their advice or give them some money in advance. There are some laws that try to curb on such activities of fake advertising and canning promotions, but these laws are so difficult to win in court, unless multiple fraud is not resulted in serious financial harm; thus preventive actions against possible fraud are very rarely taken. 


    However the biggest harm for the economy does not come from pyramids and financial fraud but from general “insecurity” coming out of such lawlessness. When in the past “easy business” could have been positive to boost pro-supply economies, whereas economies/markets have already changed into pro-demand economies of a global marketplace; so financing have changed : the narrowing profit margins of the US businesses caused large capital well gone oversees particularly to China and now India even in case small and medium businesses have rarely been financed by large investors anyway, the ones left to take over in providing capital on the US market were the small and medium investors, who were the heaviest hit by the last recession.


    “What Does Venture Capital Mean? Money provided by investors to startup firms and small businesses with perceived long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above-average returns.”


    Investopedia explains Venture Capital Venture capital can also include managerial and technical expertise. Most venture capital comes from a group of wealthy investors, investment banks and other financial institutions that pool such investments or partnerships. This form of raising capital is popular among new companies or ventures with limited operating history, which cannot raise funds by issuing debt. The downside for entrepreneurs is that venture capitalists usually get a say in company decisions, in addition to a portion of the equity.”


    In a pro-supply economy experiencing growth and in a limited marketplace (before the globalization took over) the system of deregulation and clueless business laws might have worked well, however the situation in the world has changed greatly and the relative insecurity of Small and Medium Businesses as a result of lacking clarity of business laws started having a negative effect: insecure contracting, bonding and limited personal liability of corporate structures consequences of underwriting financing difficulties. Usual for SMB are · limited access to public financing; · limited access to foreign markets experiencing economic growth; · limited ability to outsource production or move some production to somewhere more adventitious Therefore the necessity of stable borrow-ability in volatile economic environment or in direct competition to foreign companies subsidized by their governments is paramount. For SMB to be competitive would be only if better access to financing is available. The overall condition of Small and Medium Businesses and their profitability directly reflects the overall conditions of ones economy because SMB provide the highest percentage employment of all, thus if SMB struggle to survive as it happened through the 2007 Great Recession so the Middle Class and the Poor in the US economy overall. In an environment of globalization with open borders for business and ever rising productivity the Large Global Corporations are not anymore interested in maintaining industrial production on US territory, neither are these interested in investing into long term projects on US territory because of the less expensive labor and well ongoing economic growth of China, India, Vietnam and etc., same is with the Large Investors who really are not coming back on the US market either because of the lower Return on Investment ROI, therefore it is up to the Small and Medium Businesses to create employment and simultaneously to go global too, because the diversification needed for surviving market volatility may come only by going global. SMB are the one that still will continuing to maintain their main offices on US soil and they are the ones that could be easily persuaded to stay in there by right economics means such as low interest loans, subsidies and tax breaks from purely practical reasons of being close to the US market, same is with the Small and Medium Investors that are the most important to still retaining their investment on US soil. The clarity of business laws bringing out higher security to SMB and SMI is from great importance to revival US economy and to funnel so needed wealth distribution and redistribution for balancing demand-to-supply ratios. Small and Medium Businesses are much more flexible than Large Global Corporations, SMB could develop in very diverse areas of business and reflect Governmental environmental policies faster. If the Market Economics is used by its best Small and Medium Business borrow-ability should be based on enhanced market “security” of SMB on the market not on artificially general subsidizing by governments in a lack of business laws marketplace as it is practiced until now, because by using genuine market forces lower market volatility and redundancy, and consequently prevent from economic turmoil.


    In the foundation of modern days Capitalism are the Transnational Corporations, however the role of these conglomerates is very limited if not negative in solving problems of rising debt, of accelerating genuine poverty around the world and of environmental issues;


    “On today’s Fresh AirBloomberg News reporter Jesse Drucker, who has written extensively about corporate tax-dodging, explains how companies like Google, Pfizer, Lilly, Oracle, Facebook and Microsoft have managed to reduce their tax rates by hundreds of millions — and in some cases, billions — of dollars by taking advantage of offshore tax havens.”

    Introduction Norms controlling activities of TNC’s in UDHR and ICESCR Why and how these TNC’s are responsible for environmental damages and harms. Three catastrophic disasters in human history International Guidelines controlling TNC’s activities Are these Norms and guidelines are enough to hold these TNC’s liable Need of international binding regulations Recommendations Concluding remarks Transnational corporation liability for environmental harm Before starting my presentation on present topic that is transnational corporation liability for environmental harm, I would like to say that this seminar presentation is only an approach paper presenting set of issues involved which in the course of direction take us to the steps of suggestions as far as the TNC’s liability for environmental harms are concerned. Or I can say that this is the first step of my research work. To begin with let me first briefly explain to you, what TNC’s or MNC’s basically are? Transnational corporation (TNC), also called multinational enterprise (MNE), is a corporation or enterprise that manages production or delivers services in more than one country. It can also be referred to as an international enterprise. The Norms specifically define a “transnational corporation” as “an economic entity operating in more than one country or a cluster of economic entities operating in two or more countries– whatever their legal form, whether in their home country or country of activity, and whether taken individually or collectively.” The working group defines the phrase “other business enterprise” as “any business entity, regardless of the international or domestic nature of its activities, including a transnational corporation, contractor, subcontractor, supplier, licensee or distributor; the corporate, partnership, or other legal form used to establish the business entity; and the nature of the ownership of the entity.” Very large multinationals have budgets that exceed some national GDPs. Multinational corporations can have a powerful influence in local economies as well as the world economy and play an important role in international relations and globalization. It is beyond dispute that TNC’s are now the leading vehicles for economic globalization. According to UN Conference on Trade And Development (UNCTAD). In 2002, global sales of TNC’s reached $18 trillion for world exports. Throughout the past half century, states and international organizations have continued to expand the codification of international human rights law protecting the rights of individuals against governmental violations. In parallel with increasing attention to the development of international criminal law as a response to war crimes, genocide, and other crimes against humanity, there has been growing attention to individual responsibility for grave human rights abuses. The creators of this ever-larger web of human rights obligations, however, failed to pay sufficient attention to some of the most powerful non state actors in the world, that is, transnational corporations and other business enterprises. With power should come responsibility and international human rights law needs to focus adequately on these extremely potent international nonstate actors. Transnational corporations evoke particular concern in relation to recent global trends because they are active in some of the most dynamic sectors of national economies, such as extractive industries, telecommunications, information technology, electronic consumer goods, footwear and apparel, transport, banking and finance, insurance, and securities trading. They bring new jobs, capital, and technology. Some corporations make real efforts to achieve international standards by improving working conditions and raising local living conditions. They certainly are capable of exerting a positive influence in fostering development. Some transnational corporations, however, do not respect minimum international human rights standards and can thus be implicated in abuses such as employing child labourers, discriminating against certain groups of employees, failing to provide safe and healthy working conditions, attempting to repress independent trade unions, discouraging the right to bargain collectively, limiting the broad dissemination of appropriate technology and intellectual property, and dumping toxic wastes. Some of these abuses disproportionately affect developing countries, children, minorities, and women who work in unsafe and poorly paid production jobs, as well as indigenous communities and other vulnerable groups. It is no doubt that environmental consequences of TNC’s behaviour are multiple and substantial, and here I am going to discuss these environmental consequences of TNC’s.”

“Crediting” is a economic “tool” of the Capitalism to allow acceleration of startup businesses and higher consumption, however the “crediting” could properly function in economic growth with short self adjusting recessions but the most recent developments in the world economies do not support such consistent gradual development thus “crediting” started bringing negative value instead;


  • By LAURIE WINSLOW World Staff Writer
    Published: 6/17/2010 2:20 AM Last Modified: 6/17/2010 7:09 AM Over the last two decades, peoples’ ability to borrow against their homes or run up credit card balances during recessions has helped create an appearance of a safer environment while actually making the economy more fragile. That is one observation of Mitchell Petersen, professor of finance with the Kellogg School of Management at Northwestern University in Illinois. He spoke Wednesday evening at a private gathering of college alumni at the Summit Club. Petersen took time before his presentation for a phone interview to talk about some of the more pervasive, and overlooked, issues he believes have contributed to the current economic and financial crisis. While the most visible signs of the current crisis include falling home prices, increasing mortgage defaults and record unemployment, the seeds of today’s problems were planted well before the housing boom of the last decade, Petersen says. “A lot of what we call this economic and financial crisis are problems with individuals having too much credit card debt and too much consumer debt,” he said. Consumer debt was relatively flat through the 1960s and ’70s until about 1983, when the level of debt started to increase, Petersen said. He noted that the 1991 and 2001 recessions were relatively mild, as consumption dropped a bit. Unemployment never hit 8 percent in the recession of the early 1990s, and it barely got above 6 percent in 2001, Petersen said. By contrast, the recessions of 1974 and 1981 were much more severe. Normally, during recessions of the 1960s, ’70s or early ’80s, if employees lost their jobs, they didn’t have the ability to borrow against their houses because home equity loans didn’t exist and credit cards were scarce. People decreased their consumption during economic slowdowns and quit buying things, which made recessions more severe coming down. But once people resumed work, they could start buying again, which caused the economy to bounce back, Petersen said. In later years, however, people who lost jobs could take out home equity loans and run up credit card balances and continue consuming, which led to recessions becoming less severe over the last couple of decades, Petersen explained. This tendency to borrow when times are tough and then borrow and buy more when times get better causes debt to rise, Petersen said. “That means that a buffer for rainy day is no longer there so when we have a severe recession like we are in now, our savings essentially have been consumed,” he said. This ability of middle America to borrow over the last two decades has created the appearance of a “less risky and a safer” U.S. economy, and people in turn have changed behaviors and saved less, Petersen said. Whereas the average middle American in the 1960s put money in a savings or checking account, today people put it in the stock market, “which is good when it goes up, but a disaster when it collapses because that wealth disappears,” Petersen said.

    The shady business policies that worked so well in a capitalism of growth and short time self adjustments when “easy” business was considered kicking off and maintaining economic development has begun provoking negative impact under the new conditions; the lack of business laws and personal liability for the risk management, and the deregulated contract laws is not anymore spearing such economic growth and in the opposite:

  • Crisis Is Over, but Where’s the Fix? “The principle is particularly important because regulatory failures may be inevitable. If multimillion-dollar bank bosses do not see a crisis looming before it is too late, can we be sure regulators who work for far less will be more prescient? Markets clearly did a horrid job of allocating capital, but there is no particular reason to think governments would do better.Even if regulators somehow did design a perfect regulatory system, it would not last, simply because clever bankers would eventually find ways around it, just as people find ways to evade taxes, forcing tax law writers to constantly make changes.“Every decade or so,” said Paul Romer, a senior fellow at the Institute for Economic Policy Research at Stanford and now a visiting professor at New York University, “any finite system of financial regulationwill lead to systemic financial crisis.”

    Financial Reform: Wall Street Wins, Investors Lose “For example, if a bank knew it could be held liable for actions related to its dealings with a convicted felon, do you really think they would risk litigation in order to make a few shekels? I think not, but as it stands, firms can act with near impunity and support criminal activities knowing they are afforded protection by the Stoneridge decision. As for the fiduciary standard, time will tell whether the members of Congress that loudly supported the standard will regret caving and agreeing to “study” the change’s effect. Apparently it didn’t matter that the SEC already studied the fiduciary standard and found that investors didn’t know when they were getting actual financial advice as opposed to being sold a product. Without a congressional mandate, it’s unclear whether the SEC will have the gumption to make an investor-friendly decision and adopt the standard broadly.”

  • Late Payments – A Serious Problem for Small Businesses By incisiveleads A recent study has shown that more than half the small businesses in the UK have to delay payments to suppliers and other parties after being victims of late payment themselves. If you are a small business owner who has been at the receiving end of a customer who keeps deferring his payments, you know how that can disrupt your cash flow. Cracking down on late payments is not easy either, because most small businesses have few clients to start with and have to keep them happy. Well, there is no foolproof way to ensure you get payments on time, but that does not mean you are completely helpless. One basic rule is to print all terms and conditions on your invoices so there is no misunderstanding between you and the customer. Any delay in payments should be immediately followed up, so ensure you have a point of contact that is always available. The Late Payment of Commercial Debts (Interest) Act of 1998 also allows you to charge an interest on late payments, but be sure to inform the defaulter that you will be charging an interest. Any payment becomes ‘late’ beyond thirty days of the initial payment period, even if nothing was specifically mentioned in the agreement with the client.

  • However, late payments will happen some time or the other, and as a small business you need the right tools to tide you over a period of financial crisis. If you have a cash flow problem and a bunch of unpaid invoices, you should go for invoice factoring. There are quite a few factoring companies who you can approach, and at our website you can get factoring quotes for free. All you have to do is click right here. It makes the process of deciding on a particular factoring company a lot easier.

    Incisive business can help your small business in a various ways. To find out how we could assist you in your business activities,click here and visit our website. We can connect you to service providers specializing in business banking, invoice factoring, vehicle tracking and a host of other services.

    One of the great joys that men in free societies have long enjoyed is the ability to earn an honest wage for an honest day of work. In particular, the amazing capitalist engine that powered the U.S. economy for decade after decade greatly rewarded the incredible hard work and industriousness of the American people. America was known as the land of opportunity, and we built the largest middle class in the history of the world by working incredibly hard. But today, all of that is fundamentally changing. Thanks to rapid advances in technology, and thanks to the globalization of the work force, the labor of American workers is rapidly losing value. Automation, robotics and computers have made many jobs obsolete. Today one man can do the work that a hundred men used to do. Not only that, but today American workers literally have to compete against workers from all over the globe. Global corporations often find themselves having to choose whether to build a factory in the United States or in the third world. But in the third world workers often earn less than 10% of what American workers earn, corporations are often not required to provide any benefits to workers, and there are usually hardly any oppressive government regulations. How can American workers compete against that?

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The truth is that labor is now a global commodity. How can an American worker compete against a desperate, half-starving worker in the third world that will work like mad for a dollar an hour?

US jobless numbers hide scale of problem “This allows the Bureau to offer “alternative measures of labour underutilisation”, which, to the untrained ear, sounds like awful gobbledygook and unemployment by another name. And if you take the widest of these measures, which in plain English counts everyone who doesn’t have a full time job, and blames that on economic reasons (as opposed to blaming it on being sick, old, or in training) then America’s “labour underutilisation” rate went past 17% at about the time its “unemployment” rate hit 10%. A rate of 17% presents everyone with a picture of an American economy where more than one in six people who want a job, can’t get one.”

Following is the Chinese response to unemployment issues, though China has a surplus and basically could afford many economic measures other countries with Fiscal shortages, deficit and National debt cannot afford or at least may have to compromise many practices in economics used until today; anyway, the Chinese Economics uses economic instruments (tools) I a “as it comes as it goes” approach, when even counting on their growing Private sector as a major employer the Chinese well balance any problematic unemployment by using subsidies, tax breaks, social and infrastructural policies, they are balancing craftily employment Demand-to-Supply market forces:

“China’s Employment Situation and Policies” Major Measures

– Maintaining the relatively rapid growth of the economy, and putting the work of employment and reemployment in a more salient position. China will adhere to the policy of expanding domestic demand and maintain a sustained, rapid and healthy development of the national economy, so as to provide a strong drive for expanding employment. When making policies for economic growth andindustrial readjustment, it is necessary to give priority to the strategic goal of creating job opportunities and expanding employment, to make creating more job opportunities an important goal of development and to ensure that it is expressed positively in the making of macro-economic policies, such as in the drafting of plans for national economic and social development, industrial policies, financial and taxation policies, investment policies, and banking and currency policies, so as to attain the dual goal of achieving a rapid and healthy economic growth and promoting full employment.

– Promoting the readjustment of economic structure and the improvement of employment structure in coordination, and expandingthe capacity of employment. It is necessary to strengthen readjustment of the industrial structure, ownership structure and enterprise structure. Greater attention will be paid to the development of labor-intensive industries to bring into fuller play their important role in absorbing the labor force. It is necessary to direct the major part of future efforts for expanded employment to tertiary industry, and, especially, to utilize the large social demand and broad development prospects of the serviceindustry to give further play to its role in expanding employment.Efforts will be made to continuously support and guide the development of the non-public sector of the economy, further carryout various policies and measures to encourage the development of small and medium enterprises and the economy with diverse forms ofownership, strengthen support to them in such areas as investment and financing, taxation, technological service, market development,information and consultation, and personnel training, and encourage them to play a greater role in promoting employment and reemployment. While continuing to deepen the reform of state-ownedenterprises, it is necessary, through the separation of major and subsidiary sectors and reform of the subsidiary sector, to properly place surplus workers, and bring about a coordinated progress of the reform of state-owned enterprises, the readjustment of economic structure and the readjustment of employment structure.

– Adhering to coordinated economic and social development of urban and rural areas, and making overall plans for urban and rural employment. It is necessary to coordinate the development oflarge, medium and small cities on the one hand and small townshipson the other, take the road of urbanization with Chinese characteristics, and remove the institutional and policy obstaclesto the development of urbanization, so as to create more job opportunities for farmers. Efforts will be made to cancel restrictive regulations for farmers to find jobs in cities, gradually unify the urban and rural labor market, and strengthen guidance and management in this respect, so as to put in place a system enabling urban and rural laborers to enjoy equal employmentopportunities. It is necessary to protect the legitimate rights and interests of migrant workers from rural areas according to law,and give guidance to the stable and orderly transfer of rural surplus labor. It is also necessary to promote the reform and readjustment of township enterprises, make efforts in developing county economy, and actively expand the space for employment in rural areas.

– Establishing and improving a market-oriented employment mechanism with free choice of jobs by laborers as the salient feature and the legal system of the government as the foundation. It is neces-sary to give more play to the fundamental role of market mechanism in the allocation of labor resources, and form, in particular, a new employment pattern characterized by free choice of jobs by laborers. In view of the trend of diversification of employment demands, it is necessary to introduce flexible and different forms of employment according to circumstances; to improve the environment for starting businesses,and to encourage individuals to start their own businesses, so as to promote employment; to strengthen in an all-round way the building of government-sponsored public employment service organizations, improve job referral, vocational guidance and training, and provide quality employment services. Efforts will bemade to improve the legal system, clarify the government’s responsibilities in promoting employment, and standardize the behavior of enterprises in hiring people and the order of the labor market, so as to guarantee laborers’ equal right to employment. In addition, efforts will be made to speed up development of the labor market and to establish an em-ployment mechanism with laborers’ free choice of jobs as the salient feature, market regulation as the foundation, and government promotion as the driving force.

– Raising the level of education, strengthening vocational training, and tailoring the level of human resources quality improvement to the needs of economic development. It is necessary to fully utilize various education resources, strengthen the improvement of human resources quality, direct major efforts to the promotion of quality-oriented education, stress cultivation ofpractical abilities, and make efforts in improving education quality, so as to train millions of high-caliber workers, thousands of special talents and a large number of outstanding innovative talents for the socialist modernization drive. In line with market demand and the demand for enhancing laborers’ quality,it is necessary to strengthen elementary education, actively develop higher education, vigorously promote vocational education,adult education and other forms of continuing education, so as to gradually establish a socialized life-long training and education system. In line with the higher and higher requirements of economic development and sci-tech progress for laborers’ knowledgelevel and work skills, it is necessary to further readjust the structure of vocational education, increase input, construct a modern vocational education system, and vigorously strengthen training of skilled workers, especially high-level skilled workersand technicians. In view of the demand for the readjustment of rural economic structure and the transfer of rural surplus labor, attention will be paid to elementary education and skill training for farmers. It is necessary to introduce in an all-round way the work preparation system and employment accession system, and achieve the dual goal of improving young laborers’ ability for employment and regulating the supply of labor force. Moreover, it is necessary to establish and improve the vocational qualificationcertificate system, vigorously introduce the system of paying attention both to diplomas and vocational qualification certificates, introduce the vocational qualification certificate system in all technological professions and jobs throughout the society, and establish a close link between school education and social employment.

– Making rational arrangement in social security and employment, and providing basic subsistence guarantee and employment assistance for the underprivileged group. It is necessary to guarantee the basic subsistence of the underprivileged by continuously improving the unemployment insurance system and urban residents’ minimum subsistence guarantee system. Continued efforts will be made to provide employment aid, develop jobs suitable for the underprivileged group, especially welfare jobs, and help them to get reemployment through preferential policies to encourage enterprises to hire under-privileged persons and provide them with free employment services.

- Raising the level of opening-up, and giving play to China’s advantage in labor resources. It is necessary to vigorously organize labor-intensive production and processing of superior agricultural products. While steadily increasing export of industrial products with high technological content and high addedvalue, efforts will be made to improve the export competitiveness of labor-intensive products and increase their market share, so asto maintain and increase domestic employment. It is necessary to rationally guide foreign businesses to invest into labor-intensiveproducts or industries at once labor intensive and capital intensive, so as to increase as many jobs as possible. It is also necessary to actively implement the strategy of “going global” andopen up the international labor market.

Though, neither by not responding to the very important Environmental concerns and to quickly exhausting Earth resources, nor to the poor Wealth Distribution and Redistribution of a deregulated Capitalism that prompted mass Fiscal shortages and poverty thus keeping tight to the ideology approach of the past proved feasible to get any country out of the Last Global Recession.


  • The coming catastropheUnder a cuts-only approach, Social Security recipients would see their cost-of-living adjustments reduced. Medicare premiums would rise, as would the public pension retirement age. The Pentagon would have almost no money for new arms systems or for Afghanistan-scale military operations. All other spending would have to be lowered as a share of GDP. If we simply tax our way out of the problem, Penner said, the total federal tax burden would increase by 50 percent by 2040. Assuming income tax rates rose in tandem until the top rate took half of an upper earner’s income, we’d also need a value-added tax that ramped up to 7.7 percent by that date. Further, Social Security and Medicare taxes would also have to rise. A fiscal cons”


It (the last Global Recession) showed to anyone that if Governments of the Most Developed Nations of US and EU did not intervene by expanding Monetary Quantities (through accumulation of high National debt), pouring capital into Financial Institutions (such as Fannie Mae, Freddy Mac, and AIG) and even financing Individual Businesses (such as GM) their Economies and even the Global Economy could have collapsed under the pressure of the bust after huge Real Estate over-capitalization succeeded in “Trickle-down” Capitalism’s “freedom” of speculations of deregulated business and financial structures, the inadequate system of wealth distribution unable to sustain and raise “demand”.

How Globalization affects Economics


Today I found a very appreciative commentary to my work

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It is obvious, there are many commoners and intellectuals who find my articles very important and realistic, however these people are not the ones ruling this world, who I believe are far away from the problems of everyday life, so they could not and do not like to question the establishment, finally they are the establishment themselves or serve it honorably, so it seems they are to hang up themselves if they attempt changing it and who would like such a thing.

“We thought it was important to do,” Mr. Phillips said, adding that his group is already working with activists and state officials in Indiana, Ohio and Pennsylvania to urge them to take similar steps to curtail union benefits or give public employees the power to opt out of unions entirely. “The Koch brothers are the poster children of the effort by multinational corporate America to try to redefine the rights and values of American citizens,” said Representative Gwen Moore, Democrat of Wisconsin, who joined with others in the union protests.”

There is a great division between rulers, the establishment and the rest of people: it is just so obvious more like a movie: – how when someone is elected by the commoners to become a ruler gets pressured by the establishment and changes his approaches under their pressure!

What is the establishment and History of the establishment?

There were many centuries of human history when many had to work for a few to be rich; neighbors were enslaved and villages oppressed: the productivity of the past was so low and so much off that it was literally difficult to maintain any “normal” standard of life but through oppression, slavery and injustice. The level of “Social Order” was ruling the world: nationalism, religion and xenophobia were “balancing” this injustice by “we are better than you are” approach. Wars and plaguing others were releasing the valves of social buildup by internal social injustice: nobilities and war lords are competing to show “greatness and sense of destiny” for being oppressive to their own people. The economic order of superiority was the product of these low productivity and supply driven economies.

The Capitalism is a higher level of such “social order”: using the idea of an economy and a marketplace driven by trickle-down economics of over-excessive concentration of capital which by coming down to being invested creates jobs. In a supply shortages driven marketplace, the chosen are the wealthy: they are noble, smart: the pillars of the society; doing good by being interested for the society to prosper. Many other individuals are involved in working in such Capitalistic economy of pro-supply by establishing the middle class of hard working individuals succeeding to live relatively well. The governments are supporting the establishment, from one side believing in the ideology of free Capitalism economics, and from another side, being pressured by the lobbyists and interest groups. Social, Medical, and Educational expenses in such economics are considered slowing economic growth, “shady” business laws and lack of market regulations are considered prompting economic growth. Transnational Corporations are considered the front runners of development and economic growth; Industrial Production is considered the main additive the country’s GDP and its Fiscal reserves. Development in a pro-supply Capitalism is only possible by industrial production with a few exceptions of raw resources or capital lending countries who however invest into other countries’ industrial production anyway.

There are a few major distinguished fundamentals of modern Capitalism: market speculations that allow concentration of capital by the wealthy, shady business laws and lack of market regulations an easy business for the transnational corporations and market exchanges that allow concentration of capital, lack of consumer protection laws, social security laws, medical insurance laws (well things are changing in these points lately), employment protection laws that allow quick globalization and again concentration of capital by the few. The Capitalism boosted well Market Globalization in a pro-supply marketplace supported by Social Order ideologies and hard working workforce constantly improving productivity and company structure. It is considered that unsuccessful could be only people not willing to go to school or to work hard: the lazy and incompetent ones. The Ideology of the Capitalism states that everyone can succeed if he or she studies or works hard.

Well, for the last 10 years the US workers’ have improved their standard of life under zero, actually their income adjusted to inflation has been decreasing when the US workers have kept raising their productivity better than anyone in the world for the same time.

Well, for the past 20 years the majority of industrial production was either totally moved or greatly outsourced to China, now Brazil, India and Vietnam, because of the obvious reason of better Return on Invested Capital from such industrial production not done on the US soil.

Well, the high technologies have come so high that even retained on the US soil industrial production has reduced the number of industrial employment by far.

Well, the US National debt based on ever ongoing deficit has risen to $13 Trillion when the US standard of life has stalled.

Well, many other countries around the Globe have deepen in deficit and national debt thus being US trading partners have shorten the marketplace for US goods.

Well, even running high deficit and national debt the value of the USD has risen substantially instead of declining that added stress to the US industrial production, too.

Well, even President Obama is running deficit and trying to help many industries, for the US costumer, the US Medicare, Education and overall Employment this administration abilities and the results of their actions are very limited, or may be called modest indeed. When China posses and exercises much more economic freedom to manipulate markets, industries, social and infrastructural policies, and export by all means considered: having huge fiscal reserves and thus possessing incredible power in time of everyone’s fiscal shortages; China is showing flexible and pragmatic economic approaches balancing private business with governmentally run business, social and infrastructural policies with privately employment on a flexible employment marketplace, building equity driven economy by using equilibration “as it comes: as it goes” economics.

Well, the European Union follows closely the old ideology of trickle-down Capitalism tightening budgets and imposing austerity policies but success has been elusive neither for countries like Ireland accepting the austerity economic measures to their fullness, nor countries like France limiting austerity measures despite high-national debt. The question is how low the EU countries must cut their budgets to start the trickle-down effect of the modern Capitalism, if ever?

Well, neither Marx’s trickle-down Capitalism, nor Keynes’s modest deficit monetary expansion may only resolve the problems of the modern days Globalization and rising Productivity by pro-demand accelerating market forces, in which, it is obvious that not all or even many countries might industrialize themselves or for already industrialized to maintain industrial consistent economic growth. Used by lending system founded on high interest rates may function well only in economic growth or in short term economic adjustments, but it is impossible to maintain proper financial operations and financial stability in long term economic recessions, and because the Global financial system is alike to the individual markets financial system: it has the same weaknesses as the rest of not being able to go through long term economic adjustments. In such context, the last 2007-2009 Global Recession of which consequences are still in effect showed to all that the ongoing and in the future coming economic adjustments are not going to be short or self-adjustable as these were suppose to be after the ideology of modern Capitalism: thus, if Governments have not intervened into the last recession the probability for it’s self-adjusting are very improbable indeed.

Well, if the US Government has taken on many economic functions and controls to fight the last Great Recession: what kind of actions by governments could be expected in case of new recessions: it seems an unstoppable trend of governments getting involved in business and financing?

Well, if the modern Capitalism cannot use its economics to self-adjust markets in long term recessions and if trickle-down economics does not trickle down capital into provoking industrial growth but are moving to oversees, and if the recessions are to become longer and the governments taking over business and financing, thus to disrupt normal economic cycles, and, if the financial system that uses high interest rates cannot sustain longer economic recessions and prompt economic growth, and if transnational corporations cannot be any close to maintain global industrial employment, and if the huge ability of China and others to expand industrial production to unknown levels suppressing such industrial production in many other countries, and if high technologies are prompting lower industrial employment, and if, if then the Capitalism is not able to deal with the new developments of such Globalization and rising Productivity by not being able to establish a system for wealth distribution and redistribution needed to maintain fiscal stability and consumption in such economic environment.

Well, if the alternatives for such inability of the Capitalism to deal with the new global developments are the governments to take over, maybe the only realistic expectations should be evaluating the abilities of the Governments to create employment and consistent growth in some kind of socialism……. unless?

Unless an alternative to the Capitalism or the Socialism system of economics could balance “demand-to-supply” global marketplace; could deal with employment, shortage of industrial production, and economic adjustments by saving private entrepreneurship and personal freedom as main forces and “tools” of economics and for such, I consider, the economic driven by the markets, I called Market Economics or Quantum Economics, because, it is founded of “as it comes: as it goes” usage of economic tools for adjusting economic fluctuations. Under these new conditions the “Social Order” and economic principles of the Capitalism are about to be replaced by a “Market Order” of market forces and economic principles of pragmatism and flexibilities.

And here finally I will end with what I was suppose to start: the Global Worming and the Earth’s exhaustion of resources. I will just say that the only way for dealing with these most important issues and preserve Earth and Humankind is through pragmatically using economic structures and economic “tools” to enhance renewable energy sources and reduce pollution by dealing with poverty, underdevelopment and unemployment.

Joshua Konov 07.13.2010

How Economics affects Discrimination

The economics of trickle-down Capitalism has proved to the world its powers to create jobs and the consequential Middle Class of the modern-day society. In times of relative economic growth with short self-adjusting cycles, supported by “easy” business laws and regulations, in times of supply driven markets this system performed fine by building and maintaining such industrial powers as US, Germany and Great Britain to succeed higher than everywhere else’s Standard of Life and reduction of poverty, and general liberalization by constant fight against discrimination because of color, religion or nationality; such liberalization was brought and was supported by consistent continues economic development. Thus how in the US from slavery a few Centuries ago President Obama was elected, thus how in the current German National Soccer Team some of the best players are from foreign descend; thus how London has become international Mega-polis; in this very developed economies the constant fight against any discrimination has risen people consciousness to higher levels when the economic conditions have given opportunities to people from different descend and background to succeed in life becoming productive members of their societies.

Such economic growth, succeeded by the Most Developed Economies, affected gradually the rest of the world by opening countries and markets to the ongoing globalization and by raising constant attention to the unacceptability of any discrimination: after the fall of the Berlin Wall and after the China entering WTO, after the succeeded economic growth and development by China, Brazil, India and many more countries around the globe the acceptance of any discrimination as something normal has become less and less tolerable. It also became obvious that discrimination works against economic growth on a purely practical level: by creating poor market conditions, by destabilizing these markets, by the resistance of the oppressed, and by the resistance of the societies of the Most Developed Economies to accept import from places and countries that tolerate discrimination on their territories. It is obvious from economic stand point that for any countries to develop their economies an open border trade policies by the Most Developed Economies is needed, from one side access to high technologies in manufacturing, and from another side access to their markets are paramount. Thus the global processes of liberalization of countries and reduction of discrimination are most definitely to continue.

However, the trend for reduction of discrimination and oppression has turned back in that last decade as a result of the economic stagnation: lack of fiscal reserves and fast shrinking national budgets. The minorities that usually are in the bottom of these countries are the most effected; the Great Recession of the 21st Century had a very negative effect on the ongoing liberalization and the economies were greatly affected bringing waves of national sentiments to the majorities of these impoverished nations: from North to South from East to West in countries like Rumania, Bulgaria, Spain, and Ireland  less tolerance have been maintained toward minorities and immigrants, even in countries like Nederland and Great Britain immigrants were becoming less tolerated by law or by the societies as a whole. The economic crisis has shown to people: how negative effect economic conditions could have on the general liberalization from excessive nationalism and xenophobia, and even to turn back many succeeded already liberties and ante-discrimination practices: such an example are the open employment policies that numbers were either reduced or totally dismantled by many countries in the conditions of this economic dismay, other example are the financial policies for when before the Great Recession fiscal shortages were much more tolerable and the inter-financial system in European Union worked very smoothly in time of economic growth with the change provoked by the recession such fiscal shortages made example by Greece, Ireland, Poland and Portugal have become intolerable, thus even when the European Union established a Fund to help these countries in case of major default the accent was not their development or growth but their fiscal discipline by reducing substantially their budgets, and because the minorities and immigrants elsewhere are always on the bottom of these societies the prompted budgetary cuts first and at most affected these unprivileged lower classes of minorities and immigrants.

  • Gypsies and immigrants, colored and any different from the majority individuals could be on religious or descend were becoming less tolerated and accepted because of the Great Recession; the economic consequences of the Great Recession of the 21st Century has turned back history by the change of ongoing at the time liberalization and acceptance of difference; economic struggle has brought back not only poverty to many minorities and immigrants, but also it has brought back excessive nationalism and xenophobia to some people who were totally away from such feelings; general unemployment and economic stagnation, difficulties to meet the ends, business reduction are affecting anyone in one way or the other reducing tolerance and philanthropy; the effect economic recessions have on individuals and whole countries is very regressive indeed.

    Under the pressures of the European Union to maintain low deficit, Countries as Bulgaria have cut their Medical and Social expenses to the bone depriving many from basic medical and social services, where such drastic cuts have affected at its most the Bulgaria’s Gypsies, who even before the cuts were on the bottom of the society, but after these cuts have become so impoverished that actually such conditions were not seen maybe but in the beginning of the Last Century. The lack of basic food, medical help and utilities are becoming vital for them to survive: the discrimination is not into physical violence by the majority, but by the economic such that came as a consequence of the Great Recession, and when these hardships affect the majority of Bulgarians in one way or another the “tools” that could take the minorities out of their current situation such as education and economic development are becoming more obscure by the day.

    Therefore, to talk about tight budgets and fiscal restrains is synonymous of rising discrimination against minorities and immigrants.

    In time of rapidly improving high technologies; prompting rising productivity; fast globalization and fast industrialization of vast economies of China, India, Brazil and Vietnam the expectations of industrial development of many countries around the world may prove futile; even in most industrialized economies outsourcing of manufacturing and capital outflow may well shrink their fiscal reserves or at least reduce the size and the speed of economic growth that consequentially might devastate even farther the less developed economies fiscal reserves resulting into rising discrimination against minorities, immigrants, and the poor overall. When, at the moment, industrial production adds to the majority of most economies GDP and fiscal reserves the relation between their budgets and industrial production is direct. Such direct relation is supported and maintained by the Global Financial System of the World Bank, IMF and WTO, which system works very well in time of short cyclical global economic growth, but performs very poor in time of long-term recessions and shortages of demand. When lending done by the Global Financial System is smooth while lent capital is returned after short recessions and helps economies revival the industrial production has generally shifted and moved away from many economies of European Union and North America and at the same time improving technologies have reduced employment even when manufacturing employment still remains their that possibly of positive effect from high interest lending is a delusion. Even farther, with the deepening fiscal shortages for many economies these economies ratings come down and they start borrowing on even higher interest rates. It is obvious that such “double jeopardy” Global Financial System may finally contribute for the impoverishment of many countries and markets and their demise instead of their economic development that lack of economic improvement will directly affect the issue of discrimination against minorities, immigrants and anyone different by somehow.

    Other factor that affects discrimination is the rising energy prices: the diminishing quantities of Crude Oil, Natural Gas and other natural recourses has had devastating effect to the less developed economies by rising utility and transportation expenses when at the same time lack of industrialization has prompted their fiscal shortages, thus how many economies have lost their ability to maintain fiscal reserves and budget to deal with the lowest levels of their socio-economic structure where the minorities and immigrants were. Foster Fuels are diminishing by time and these are priced on a Global marketplace therefore less developed economies deal with such rising prices much harder than the most developed economies do. Such Global stagnation does not affect only less developed economies but it most definitely affects the most developed too: rising crime, poverty, shrinking consumption and expanding emigration in process in less developed economies reduce export, industrial production supported by rising immigration the ground for intolerance against anything different is growing too.

    The dangerous Global pollution levels ask for prompt action to use technologies for low emissions and maintain clean environment for the Earth to survive, but these new requirements require a lot more expenditures by all countries, and because most of renewable technologies are quite expensive and with low productivity they mostly go toward expanses then toward profitable industrial production; such technologies reduce competitiveness to even Most Developed Economies on the open global marketplace where even without it lower employment expanses in other parts are more than enough to trigger outsourcing, but the needed such expanses are totally out of reach for many less developed economies with constantly shrinking standards of life and fiscal reserves. Thus the expenses for cleaning the Earth environment will put extra pressures to the fiscal reserves and the impoverishing of minorities and immigrants will go even farther.

    Putting in context all of the above, a natural global growth in the conditions of currently used Global Financial System is quite improbable to reduce poverty and enhance fiscal reserves for many economies to respond in constant lack of outsourced industrial production, rising energy costs and expenditures so much needed to enhance renewable energies to protect the Earth from catastrophe. The processes of modern “post” recession very heavily alienate minorities and immigrants by establishing conditions of intolerance and xenophobia and if major changes are not adopted by the Globalizing marketplace these processes are not going to get any better.

    Other reason and not the least important for the deadly Global Recession of 2007-2009 could be considered the exodus of Industrial Production and related Capital Investment from the Most Developed Countries and Markets such as US and EU into China and India.

  • Xinjiang attracts nearly 13 billion yuan of external investments in Q1“External investments have played a crucial role in spurring economic growth in Xinjiang Uighur Autonomous Region. Xinjiang attracted nearly 13 billion yuan of external investments in the first quarter of 2010, up nearly 46 percent from last year, marking the highest quarterly growth rate of paid-in investments since the global financial crisis.”

In the past, Social expenses where contra productive for maintaining Economic growth, thus Economies of most socialized countries such as of these of the Eastern Block and then China and India (of the Early and Mid Sixties, Seventies) were not able to keep up enough “supply” to balance the “demand” for goods and services, however with the ongoing Globalization and rising Productivity, supported with huge Capital the system of Social Wealth Distribution is becoming more economically adequate as the economies of China, France, Germany, and in its own ways Japan have shown. These countries were able to overcome the Global Recession by having better than US Social Systems for Wealth Distribution.

After the fall of the Eastern Block and the China’s entering into WTO the Globalization stepped on to establish economic conditions for incredibly fast industrialization of China and now of India; very accessible and easy movable highly technologically advanced industrial equipment for manufacturing combined with already highly capitalized US financial markets leering for ROI found prospective on vastly populated Chinese marketplace (of educated and skilled labor) to move industrial production, outsource and invest huge capital into industrial production and related technologies.

How Globalization affects Equity

In times of Globalization some economies and markets build equity however some not only cannot use their equity to enhance their standard of life but lose their equity to lack of business that provokes deterioration of equity or at least discount of equity.

Equity is in the foundation of the economy and the market: in the past most of the equity consisted to physical property but gradually more intellectual property and subjective market securities have become equity. Thus when individual or corporate equity is evaluated plus the physical equity if any the intellectual property, the hold securities and the projected economic growth are considered equity. The trend toward intellectual property and market valued securities instead of physical equity is more than obvious for private and corporate equity equally. However, private equity for the majority in the world consists of physical property equity when intellectual and market securities equity is more possessed by very wealthy individuals and individuals living in the most developed economies.

There is direct correlation between market individual income and equity value, because equity value reflects general market value of a property which relates income financial statement. A property value supported by higher income statement is higher than a property value supported by lower income financial statement. In some cases as it happened before the last Great Recession market property value became uncontrollable prompted by pure speculations and compromised lending practices. Consequently the exasperation of property value burst bringing financial losses and lost of properties to many. Seemingly equity of property values should well reflect the real market property values which reflect general income level in this market. Talking about equity not related to physical property but could be intellectual property, market security, or projected economic growth with very high subjectivity in the real economy the market value of such equity is more related to security of intellectual property, market securities and certainty of projected economic growth. Factors that directly affect these equity are scrutinized historical development of the market, most recent economic indicators showing the direction of this market and consistent indicators of the direction of proximal development, factors that indirectly affect these equity are the level of real acting rule of law and contracting laws of such market, the clarity and accountability of the marketplace and trading exchanges, the clarity and accountability of intellectual property laws, and the level of personal liability of the risk management of corporate structures, the fiscal stability and the respective infrastructural maintenance and improvement, and social and medical security in this market.

Globalization has enhanced the need for individual markets of using Social and Infrastructural expanses for balancing “demand-to-supply” when in the past these expenses were functioning as stoppers toward economic growth because the overall productivity was lower and there were many closed for globalization markets, now the conditions are changing the productivity is rising constantly and the almost all markets are eager to globalize. Other major changes at the moment are the China’s entering WTO and the global competition and the consistent economic growth for the last 20 years China has succeeded. By attracting the majority of global investment and by becoming economy to which outsourcing and new startup manufacturing China become the industrial power that might well tip-off “supply-to-demand” into “demand-to-supply” market configuration; such processes shorten already shortening employment in manufacturing to the rest of the world. Manufacturing, industrial production could well be considered in the foundation of the modern Capitalism that adds the most to fiscal reserves of most of global economies by highly paid employment; the most advantageous return of investment and the most secure buildup of equity: the higher growth of industrial production the higher level of equity value.

The Most Developed Economies are considered the Most Industrialized Economies.

In such market environment of Globalization (outsourcing and moving industrial production to less expensive economies) and rising Productivity (improvements in high technologies and shrinking employment marketplace cause this rising productivity) industrial employment is shrinking fast at US. Very few are the economies of Most Developed ones that have succeeded under current forces of industrial competition to sustain industrial production and keep up their industrial leadership: Germany and Japan are the few. The value of equity as stated closely relates industrial production of the modern day economics therefore overall such value will deteriorate in markets with deteriorating industrial production.

Modern economics does not take in consideration the value of already succeeded equity if economic industrial economic growth is not maintained and only short term self-adjustments are project-able. Such positions of equity directly relate the financial system of individual markets and the global financial system which lends on relatively high interest rates and short term, and in which corporate structures are run on short term profitability. Indeed equity related intellectual property and equity related market security are long term corporate equity however the fluctuations of overall market equity value often fluctuate and reflects corporate equity values violently.

In the past when supply was leading and most developed countries were firmly holding onto the global industrial production such fluctuations of individual and corporate equity values were productive because of prompting concentration of capital then prompting consecutive economic growth, than also less developed economies were more like satellites to the most developed ones being able to support fiscal reserves for social and infrastructural expenses. Even some parts of such industrial production was developed here and there in different countries the majority was still kept by the most industrialized economies. The equity values in most industrialized markets were therefore higher than these of in less developed markets and these still are, except that under the new arousing conditions of globalization and rising productivity industrial production has been gradually moved and outsourced to China, and now India, Brazil and Vietnam which are vastly populated countries with inexpensive labor force and some good industrial structures, therefore in terms of value of equity related industrial production the most definitive becomes the issue of lack of such industrial production to many economies and if such is reduced or lost what consequently would be their value of equity. Intellectual property and market security values are much more flexible and adaptive then the real estate equity value because intellectual property and market security equity reflects an economy, country, marketplace achievements in education, social and infrastructural development that requires long term development thus countries as US that very well represent such succeeded development will be hard to be shut away as holders of such equities. However such superiority is a short term prospective even to the mighty US because of the Internet and the constant exchange of information and technologies, because of the outsourcing and moving industrial production the new emerging economies would pop-up if these themselves develop required infrastructure, social structures, and education to respond to the changing realities. In case of China when in the past its communist social policies were contra productive to its industrial growth and development under the most recent globalization and rising productivity China’s Social and Infrastructural expenses proved to be very productive in balancing its “demand-to-supply” and thus succeeding consistent economic growth even when the rest of the world went through the Great Recession, thus China’s equity has risen much because of its economic growth.

Equity values are very sensitive economic indicators more like currencies; the difference between them is that currencies’ values are more related to short term global adjustments and fluctuations when equity works in longer terms. Equity values are harder to built: real estate, infrastructure, intellectual property, market security equity values are to be used in the future as economic indicators for a country, economy, market evaluation and underwriting. To use equity values, economics must change the ways these values are preserved and enhanced even when industrial production is not going to be the main economic indicator as it has been for some time. Economic “tools” are to be used to sustain equity values in a “as it comes: as it goes” basis and approach, that approach differs from country, economy, market to country, economy, market because of their level of development, mentality and tradition. In some Social and Infrastructural expanses should be reduced in short term to prompt economic development in some the Social and Infrastructural expenses should be well enhanced to prompt such economic development. There are some economic “tools” that are for all and these are the expanses for preventing pollution and implementing renewable energies, these are economic “tools” for balancing “demand-to-supply” on a global scale and are to be financed by the global financial structures of the World Bank, IMF and WTO through Commercial Banks on a marginal interest rate or subsidies. For such lending paramount should be the enhancement of businesses security: of business and contracting laws, of personal liability to corporate structures, of corporate bonding. The global financial structures should be given the controlling functions over global balance of “demand-to-supply” to prevent from inflation, the issuing of monetary quantities power to keep interest rates low, the targeting countries, economies, markets weak points for building equity, the controlling over countries, economies, markets compliance with the guidelines and underwriting, the controlling over commercial banks’ execution of these guidelines and underwriting matrix.

The existing equity of countries, economies, markets should be the foundations for low interest lending therefore overall security should be enhanced thus countries, economies, markets could become eligible for financing

In the new century of market economics industrial production should not be the only way for fiscal reserves but ones equity that could be built by properly balancing its “possible demand-to-supply” and properly and pragmatically using all economic “tools” to raise its “security”.

  • China’s Barbie Doll EconomicsOft-quoted, Dong Tao, a heavyweight economist at UBS in Hong Kong, once said: “A Barbie doll costs $20, but China only gets about 35 cents of that.” He was talking about global trade statistics at the time, but that proclamation might help explain why Chinese companies are increasingly shopping for and successfully acquiring storied brands, most recently, Ford’s Volvo.The lesson: the big money is in owning the brand, not just making it for foreign companies, writes the AP’s William Foreman.
Capacity (Equity) building as a China’s National Policies is a balance between Free Enterprises rising Productivity and Social and Fiscal Policies and Infrastructure
 
 
Equity, capacity and sustainability “The concept of equity in the context of capacity building is not sheer ethical. It”s mixed with certain practical social and economic meaning, therefore inseparable from sustainability.Equity here contains three folds of meanings: 1) equity between existing generation and future generations; 2) Equity between different social members under the same generation; and 3) Equity in responsibility and obligation that different social members or groups have to achieve sustainable development. Equity between generations, to much extent, is subject to ethical area. The current generation, in moral sense, should avoid “eat rice from ancestors while break future generations”pot”. They have no right to overconsume and damage natural environment and resources that the future generations will live in. This point was made very clear in the World Committee on Environment and Development Report. In its definition of sustainable development, that not to harm the future generations to meet the need of their own was established as a condition. Although capacity building of the current generation is helpful to equity between generations, this equity however is not the most important problem to solve in the area of capacity building. The equity between different social members under the same generation is closer related to sustainability. On the one hand, from the perspective of social justice, it”s necessary that the society takes into consideration the poor’s interests so as to reduce the gap between the rich and the poor. This was emphasized in the Brundland Report. That is, The basic needs of the poor in the world should be put at the top priority. On the other hand, equity between different social members under the same generation is also a condition to sustainable development. It seems that there is not much connection between equity and sustainability, or not so direct. However by some analysis, can you find that different social members”unequally possession of the resources is an important reason for difficult sustainable development.This is because that even though the society in general is rich in resources averagely speaking, yet the gap in term of resources possession will force the social members short of resources to overuse or abuse their limited resources to make a living. Since the environmental problems are interrelated and intereffected, some part of unsustainability in the society will likely lead to an overall sustainability. Therefore, equity is also a condition to the sustainable development process. Sustainable environment and equity of social responsibility and obligation have been an issue that developed countries and developing countries keep debating on. Who has polluted the environment? Who is making the environment worse and worse? This is an issue of responsibility and obligation. Even though it”s an issue of equity between different social members or groups under the same generation, in essence, it”s a practical issue in international politics and economics. However, even if every social member or group is willing to assume the obligation, does he have the capacity to realize the commitment? There you find that equity, capacity and sustainability are closely related with one and another.”
 
 
State Employment is used as a balance for higher wages in Non State Employment instead of used by the Economics of Capitalism (mostly and only) Employment Market Forces.
 
 
Ⅲ. The Institutional Transition Under the Dual Labor Market From our analysis of the features of employment absorption and wage determination in the two parallel urban labor markets we can make the judgment that the labor market in the newly established sector determined by market forces represent the future direction of development. In other words,the process of transformation from the SOE”s employment system to NES”s is the process of the formation of the labor and wage system of the market economy. How will this system transition take place? Since the two systems of labor and wage in the two kinds of sectors dominate their respective labor market, the competition for laborers between these two kinds of enterprises and therefore the expansion of one labor market and the reducement of another will realize the transition from one system to another. This is the first form that the transition of employment system will take. In the process of expansion and reducements of the two labor markets, caused by the competition between the two kinds of enterprises, the traditional system of the state sector will respond accordingly, namely by introducing reform in order to survive in the competition and shift to a market economy. In this way the second form of system transition takes place. First, we will look into how the first system transition that is characterized by employment transfers between the two kinds of enterprises occurs and the features of its transformation. If we suppose the urban labor market is closed off for outsiders, laborers are distributed merely between the SOEs and NESs. Chart 1 indicates the competitive relations between these two sectors as well as the process of expansion and reducement of the two labor markets.The horizontal axis stands for the labor volume. From O1 to the right, the labor volume of the SOEs can be measured; from O2 to the left that of the NESs can be measured. The domain between O1 and O2stands for total supply of labor. The vertical axis stands for the marginal productivity of labors or the wage level. The curve tilting downwards from the right to the left is the curve of marginal productivity of labors in the NESs. It tilts because their marginal productivity of labors decreases with the increase of the employed labor”s size. At the same time, the marginal productivity of labors in the SOEs increases with the number of workers leaving their enterprises.Thus, the curve tilting downwards from the left to the right is the curve of marginal productivity of labors in the SOEs. The curve that is steeper, is the curve of marginal productivity of labors in the SOEs under the assumption that their wage level is determined by the market (see name in quotation marks). In this situation, this curve intersects at the point A with the curve of the marginal productivity of labors of NESs during their employed labor volume expansion. This means the wage level of the two kinds of enterprises are equal to the point Wa, and the expansion of labors”volume in NESs no longer continues. Then the labor”s volume in the SOEs is O1A while that of NESs is AO2. Since the SOEs are overstaffed and wage is not determined by the marginal productivity of labors, however, their curve of marginal productivity should be more flat (might be a horizontal beeline without elasticity), i. e. the curve whose name is without quotation marks that intersects at the point B with the curve of the marginal productivity of labors in the NESs. It is at this point that NESs stop expanding their labor volume, here the wage rate is Wb. As the wage is determined institutionally NESs need to pay higher wage to attract laborers; and the transformation of the laborers from the SOEs to NESs becomes smaller. In the real laborer”s distribution, the laborer”s volume employed by the SOEs is O1B instead of O1A, that for newly established enterprises is BO2 instead of AO2. So the NESs are limited by their ability to pay higher wage, the difference between labor volume they really employ and that they should employ is indicated by the distance between A and B in the chart. Chart 1 Labor Transfers between Two Sectors Our theoretical analysis reflect the reality of transformation of laborers between the two sectors. One characteristic of NESs is very labor intense. It is not feasible for NESs to pay very high wage to attract employees from SOEs if NESs are to keep their advantage in laborer”s resource. So competition of employment is limited by the scope of their ability to pay high wages. Within this scope, however, NESs can certainly attract relatively high qualified workers to form the backbone of their enterprises without taking cost into account. As it is not possible for the NESs to obtain all the laborers they need from the state sector it is necessary to have other channels to find labor. If NESs had not have other such channels, this sector would not have been able to develop to the present stage. Our analysis above was made under the assumption that the urban labor market was closed off for outsiders, in our further analysis we will give up this assumption. NESs obtain highly qualified workers from the SOEs by paying higher wage in order to satisfy their needs for technology. The other source is laborers with common skills from the rural areas.
 
 
China has discovered that globalization and international competition work in its favour.
  • Great exportations “China overtakes Germany to become the biggest exporter of all” “CHINA’S rise has long appeared inexorable. Despite a decline in total world trade, China has seen its exports fall less than those of other big powers. A new report by the World Trade Organisation calculates that the total value of merchandise exports fell by a staggering 23% in 2009. Among the top ten exporters, Japan’s shipments were worst affected (falling by 26%). Although China’s exports also fell (by 16%), the contraction was less painful than in Germany (down by 22%). As a result China is now the single largest exporter. The global downturn has helped to reduce global imbalances; the leading three exporters accounted for 26.7% of total world exports in 2009 down from a third of the total in 2008. The WTO expects trade to rebound by nearly 10% this year.”
  • The Real Reason China Resists on the RMB“As I see it, China is asking a question to which there is no easy answer; what right does the US have to lecture anyone on economic matters now, having played so large a part in causing the current global recession through loose monetary policy, poor risk management by some of our most prestigious companies and monumental regulatory failures? They are responding to the continued US belief in American exceptionalism, that we can do whatever we do, right or wrong, and ignore the criticisms and demands of other countries who often bear the consequences of our actions, while we continue to insist on our right to criticize and make demands on them. As Brad Delong and Stephen Cohen have pointed out, the US simply no longer has the economic clout to get away with this any longer, and who better than China to stand up to it?
The problem of the Rest of the World is the ideological almost blind following of Marx’s’ “Das Kapital” financial system controlled by the rules of “trickle-down” Capitalism that happen to be quite impractical even when this system built North Americas, Great Britain, France and Germany: Great Powers envied by anyone in the World, however looking in History things sometime have to change; it happened to Rome, Persia, Victorian Empires, and etc., thus change could be considered as ongoing now affecting different countries and markets in different ways, but the trend is quite similar ( In the World short term history: once mostly agriculturally driven GDP changed into mostly industrial production driven GDP, now it is about to change into mostly “artificially” balanced “Demand-to-Supply” Market Economics GDP not the ideological one followed as a mantra by the west, however if global economy does not adapt to the new upcoming with the globalization challenges very hurtful consequences may occur).
 
 
 
· BRUSSELS (Reuters) -European Union finance ministers will try to agree the fine points of bank stress testswhen they meet next week and break a deadlock in talks on new financial supervisors, EU diplomats and officials said. Meeting on Monday and Tuesday, they will also press Slovakia to stop balking at signing an accord needed to launch a 440 billion euro (364.7 billion pound) support mechanism for euro zone countries in financial trouble. The euro zone’s 16 finance ministers, whose meeting will be followed by the gathering of all 27 European Union finance chiefs, will also try to push on with negotiations over stricter budget discipline rules so they can take effect next year. “Stress tests will be a major point in the discussions. It will be a follow-up to the presentation of CEBS,” said an EU source, referring to the Committee of European Banking Supervisors, which on Wednesday published broad guidelines on how the bank health check-ups will be carried out. CEBS’ statement lacked some important details, for example the scale of write-downs for banks holding sovereign debt deemed not entirely secure. It will be the last full finance ministers’ meeting before the stress test results are published on July 23. “The ministers will also discuss policy responses by countries where stress tests show pockets of vulnerability, if this is indeed the case,” the source said. Countries should in general have sufficient national funds to recapitalize weaker banks, but some may want to turn to special EU rescue funds set up this year to help governments withstand the turbulence in sovereign debt markets. “Turning to those funds would require strict conditionality and negotiations with the European Commission,” the source said. The funds include a 60 billion euro facility guaranteed by the EU budget, which is operational, and the 440 billion euro mechanism, which will be ready when all 16 euro zone countries sign a relevant framework agreement. Euro zone newcomer Slovakia’s government, formed after an election last month, has doubts over signing the agreement and the country’s Finance Minister Ivan Miklos will face pressure from his 15 euro zone partners to approve it. “We expect Slovakia to make an announcement that will allow us to make the vehicle operational,” the source said. Miklos has told Reuters that all options are open. FINACIAL SUPERVISION, BUDGET DISCIPLINE”
 
 

How Globalization affects Currencies, Monetary Policies

 
 
With the acceleration of ongoing Globalization market conditions have changed consequently affecting the value and volatility of national currencies. In European Union the euro EUR has replaced many local currencies. The U.S. dollars even still maintaining its powers has been challenged by the Renminbi (RMB). Many other currencies are pegged to the U.S. dollars and the euro EUR to avoid fluctuations and harmful volatility. The power of such unification of Global currencies is used by some countries such as China and Germany to keep up growth, the weakness of such unification of Global currencies result for many countries such as Greece and Spain to accumulate huge national debt and many more other countries to deepen into genuine poverty. As everything else in the process of Globalization there are winners and there are losers as well.
Currencies reflect the economic situation of their issuers: when Japan got into economic crisis in the 90s the yen (JPY) reduced is value, when the US got into 2007 Recession the U.S. dollars lost price far in advance then when Greece got into “high debt” trouble the Euro started deteriorating; it should be clear that major currencies like the U.S. Dollar (USD), the Euro (EUR), the Renminbi (RMB) and the Yen (JPY); however in the new Globalization the accumulation of National Debt as a result of stimulating economies does not necessary decrease currencies values for which good example is the USD in the last year or so and austerity fiscal policies with promises of cutting deficit and playing sound “old” economics does not necessary increase currencies value for which good example is the EUR and its most recent developments; nor by expanding one’s Social and Infrastructural policies would necessary decrease their currencies values for which good example is the RMB which value is considered depreciated instead, nor by heavily subsidizing your industries and SMB would decrease one’s currencies value for which good example is the JPY.
Many more factors are provoking currencies fluctuation but the trend goes like this: the Globalization has weighed more on
  • the Demand-to-Supply side of the economies instead of the Supply-to-Demand side as it always had been;
  • the Deflationary market forces then and instead of the Inflationary such as it always had been;
  • the Prospective for stable market development then and instead the Prospective for expanding industrial production as it always had been.

However, the variety of “many more factors” mentioned above such as countries:

  • socio-economic structures
  • productivity
  • infrastructure

All of these considered “equity” play a major role in currencies value too.

Here it will be important to mention the “relativity” of the economic “tools” for maintaining currencies value, because even a general trend could be apprehended the currencies value could easily go the other way and supply may overrun demand, and inflation may overrun deflation if proper economic rules are not expanded internationally, but still the possibilities for a very accelerated industrial production in regions of China, India, Vietnam, Brazil are so “easily” achievable because of the mobile highly developed structures of the global conglomerates, the high technologies and the global capitalization basically offset in a short term these possibilities of turn around. However, certainty in the modern economics I believe are quite limited: there are more like of “quantum economics” adjusted by economic “tools” used as “parameters” instead of philosophical “certainty” of the dialectic economics; (for more see: Quantum Economics – Philosophy of the Economy”)

The currencies value reflects the ongoing Globalization and how adequately individual governments follow “the momentum” in history: the Demand-to-Supply motion of possibilities for development; thus, under certain condition lifting one’s Social and Infrastructural expanses might be positive to balance the Demand-to-Supply ratios in another it might be negative for the economy; also these economic “tools” could differ from country to country and from region to region, so proper evaluation of individual countries “current possibilities and momentum” should be paramount when balancing Demand-to-Supply ratios. For some countries giving a bit more freedom to businesses may accelerate their economies for another regulating business to make it more “secure” for easier financing could be the answer of “the momentum”. However, the trend is the trend, and for the most developed economies the biggest problem at the moment is the lack of proper Demand. Production based economics of the Capitalism when production means mostly industrial production that adds the majority to these countries GDP must well change its (the Capitalism) ideological approaches toward economics and start using more pragmatically inclined approaches of “as it comes: as it goes” economics of market adjusting to keep Demand-to-Supply ratios balanced.

For the last couple of years it became obvious that the system of economics of self-adjusting Supply-to-Demand has become inadequate and governments started taking the role of investors, banks and promoters which trend if followed will move to governments the majority of business if a few more recessions go through when governments are inept in doing and promoting business and lack any flexibility so needed in business: they the governments should be only the final result for correcting economies and the consequential currencies values.

To prevent from recessions is not easy but could be possible if:

· economic “tools” are used pragmatically instead of being used ideologically;

· general business laws start applying to all participants on the Global marketplace which could promote the Small to Medium Businesses (SMB) and Small to Medium Investors (SMI) to become equally competitive to the Big Businesses and Big Investors;

· Global central banking represented by the World Bank, IMF and WTO change their role from being “the lender” into the one of being “the controller” of keeping Global Demand-to-Supply balance trough using low interest loans and subsidies to SMB to promote Global growth and to impose renewable energies and environmentally friendly enterprises too;

· Global central banking should have issuing monetary power, instead of levying on financial institutions which action will jack-up lending rates instead;

· Global central banking should use commercial banks for marginalized lending on set matrix to promote growth;

· The priorities of the Global “controlling” should change from lending to inflation (Demand-to-Supply balance), because that’s the most important indeed.

Currencies reflect each country adaptability to the new developments in the new Globalizing marketplace but also the currencies are becoming also more like a computer game and particularly when (RMB) becomes a natural balance to the (USD) their (the currencies) value will well lose volatility if this Globalization is executed properly:

Good example of how such Globalization was not executed properly is what happened in the European Union when countries were politically united under the same currencies but their economies differed substantially in development and life standards: the EU did not attempt to equalize these differences by strong social programs and requirements by using commercial banks to get access to SMB and by lifting individual countries standard of life but instead by governmentally run programs, very complicated and inaccessible to the majority of SMB and by general lack of Social Programs. As a result of the EU inadequate actions some countries like Greece deepened in National Debt and others like Bulgaria (which currency is pegged to the EUR) deepened in Genuine Poverty in which both cases the value of the (EUR) and the overall economic growth of the EU was not improved. The austerity measures approved by the EU obviously were not accepted as positive by the currency traders so the value of (EUR) is drifting away. The way EU has been developing is more like having a million dollar house next to the ghetto and wondering why its market value is very low. It is obvious that the condition of your nationhood is important for your prosperity, the schools in the area, its crime rate and etcetera.

What was referred to EU and the problem of underdevelopment for the EU that brought all pf its problems basically applies to the rest of the world where such inequality is huge, and because of the Globalization has become not a problem for these poor underdeveloped countries but for the entire world and mostly for the most developed industrialized countries which capacities of industrial production has long time overrun their own demand (here it is important to mention that underdevelopment exist in some parts of the most developed countries internal areas: in the US some states like Michigan, in EU many countries like Bulgaria and in China many areas).

The model of self-adjusting trickle-down capitalism based on profitability from industrial production mostly does not posses the capabilities to change the Global marketplace because all countries cannot be industrialized when technologies cut on manpower and outsourcing moves production elsewhere; still I believe the freedom of business and the vitality of entrepreneurship should be used but many fundamental changes should be done so instead with the next recessions the governments do not take over business: bureaucratization seems very monstrous way of solving these problems indeed; there goes away with personal freedoms and there goes away with liberty too. But for these freedoms to be saved the Global business, financial system, the ways underdeveloped markets are approached and the ways economics is used must change.

If these new developments of Globalization have harmful effect on the Most Developed Countries of North America, France, Germany and Japan to the rest of the World their effect is deadly: rising national debt or genuine poverty are everywhere: Latin Americas, Africa, Eastern Europe, and elsewhere;

  • Globalization and the Developing Countries: “My task is to talk about globalization and inequality in developing countries, with emphasis on Latin America. I have a simple point to make: globalization puts developing countries at risk of increasing income inequality. The increase in inequality in the United States over the last 25 years (during which the income of the poorest 20 percent of households has fallen in real terms by about 15 percent) has been blamed, rightly or wrongly, on changes in trade, technology and migration patterns associated with increasing economic integration with other countries. For developing countries, any risk of increasing inequality associated with active participation in the global economy is even greater, if only because of the greater inherent institutional weaknesses associated with being poor. Latin America has a special disadvantage: its historical legacy of already high inequality. Inequality that is already high complicates the task of effective conflict management, which Dani Rodrik has just reminded us is a critical input to managing open economies. In the past, for example, high inequality combined with the politics of redistribution led to periodic bouts of populism in Latin America – ineffective and counterproductive efforts to manage the conflicts provoked by the dangerous combination of high inequality and hard times. My task is to talk about globalization and inequality in developing countries, with emphasis on Latin America. I have a simple point to make: globalization puts developing countries at risk of increasing income inequality. The increase in inequality in the United States over the last 25 years (during which the income of the poorest 20 percent of households has fallen in real terms by about 15 percent) has been blamed, rightly or wrongly, on changes in trade, technology and migration patterns associated with increasing economic integration with other countries. For developing countries, any risk of increasing inequality associated with active participation in the global economy is even greater, if only because of the greater inherent institutional weaknesses associated with being poor. Latin America has a special disadvantage: its historical legacy of already high inequality. Inequality that is already high complicates the task of effective conflict management, which Dani Rodrik has just reminded us is a critical input to managing open economies. In the past, for example, high inequality combined with the politics of redistribution led to periodic bouts of populism in Latin America – ineffective and counterproductive efforts to manage the conflicts provoked by the dangerous combination of high inequality and hard times.”

Greece, Portugal, Spain, and Bulgaria are among many economically struggling to couple with ever lack of Fiscal and Monetary quantities countries: to maintain the rising productivity of Germany, Japan and China or to industrialize themselves is just futile so they are cursed to high National Debt like Greece, Portugal and Spain or to high Poverty like Bulgaria whose Government was “hired” by the World Bank and IMF to support strict financial order:

  • Rating Agency Data Aided Wall Street in Mortgage Deals“In essence, banks started with the answers and worked backward, reverse-engineering top-flight ratings for investments that were, in some cases, riskier than ratings suggested, according to former agency employees. The major credit rating agencies, Moody’s, Standard & Poor’s and Fitch, drew renewed criticism on Friday on Capitol Hill for failing to warn of the dangers posed by complex investments like the one that has drawn Goldman Sachs into a legal whirlwind. But while the agencies have come under fire before, the extent to which they collaborated with Wall Street banks has drawn less notice.
  • U.S., EU call on Tokyo to ensure fair competition against Japan Post TOKYO — “The Japanese government has received a letter from the United States ambassador and his European Union counterpart calling on Tokyo to ensure fair competition when revising the nation’s postal privatization plan, Chief Cabinet Secretary Hirofumi Hirano said Friday. In the letter, U.S. Ambassador to Japan John Roos and Hugh Richardson, ambassador and head of the delegation of the European Commission in Japan, are believed to have claimed that Tokyo’s plan on raising the deposit cap on Japan Post Holdings Co’s banking unit may breach World Trade Organization agreements.” Commentary: This is very suspicious to say the least. As the international criminal bankster gangsters enrich themselves by creating havoc around the world(Greece, Ireland, Iceland, Spain, Italy, Portugal, US,)and get countries under their control, a national safe haven for savings is very important.US ans EU are claiming unfair competition because Japan wants to enable a safe haven for people’s savings. Japan, hold strong to your national sovereignty, do not let these criminal scumbags and there New World Order agenda in. World Trade Organization creating problems and enriching those at the top through neo-mercantilism.”

However neither of these two approaches (the one that Governments keep raising National Debt nor the one which Governments maintain strict Budgetary austerity) happen to bring “prosperity” to these countries: “high deficit” or “financial austerity” both are not going to make Spain, Portugal and Greece nor Bulgaria “industrial powers” thus they could cover their ever arising Social Expenses and Infrastructural Deterioration to ever shrinking Fiscal Reserves.

  • Profit of Bulgarian Banks Down by 37% in 2010 Q1 “The profit generated by the Bulgarian banking system in the first quarter of 2010 amounts to BGN 170 M, which is a 37.2% drop year-on-year. At the same time, however, the profit of the Bulgarian banks grew by 7.5% in January-March 2010 compared to the last quarter of 2009, showed data of the Bulgarian National Bank released Thursday.
  • Fed chief: Joblessness, housing still problematic Despite a more stabilized economy, he says, the U.S. is “far from being out of the woods.” “WASHINGTON — Problems in the housing market and high unemployment are the biggest economic challenges the nation faces, Federal Reserve Chairman Ben Bernanke said Wednesday. After suffering through the worst recession since the 1930s, the economy seems to have stabilized and is growing again, Bernanke said. But he warned: “We are far from being out of the woods. Many Americans are still grappling with unemployment or foreclosure or both.” In prepared remarks to business people in Dallas, Bernanke said he saw no evidence of a “sustained recovery” in the housing market, noting that foreclosures keep rising. Commercial real estate remains a trouble spot, too. The toughest problems are in the job market. Even though layoffs have slowed, hiring is “very weak,” Bernanke said. He noted that unemployment, now at 9.7 percent, is still close to its highest levels since the early 1980s.”

Impossibility for many countries to industrialize joined by constant lack of capital means “no solution” under the control of the World Lenders (World Bank. IMF, WTO) that “control” their borrowers tightly.

Could not be denied that some of these less developed countries might have corruption, improper bureaucracy, insufficient markets, and etc. but whatever WB and IMF could present as reasonable for lack of development: the ongoing processes of Fiscal shortages for these and many other countries are to be unavoidable: and because most of the World economies are 80%+ based on consumption these countries lower life standards prompt weak market demand boomerang back to the Most Developed Industrial Countries’ export and so it goes on and on.

Unless in the Past, these new conditions of decreasing industrial production, following consumption and demand affect US, many countries in EU, and the rest of the World in a very harmful ways seen at the Last Global Recession.

US

  • U.S. rebound on good footing: Fed’s Fisher (Reuters) – The U.S. economic recovery is gathering speed as business activity picks up pace, despite lingering weakness in employment, Dallas Federal Reserve Bank President Richard Fisher said on Tuesday.
  • Alternatives to appreciating the Chinese yuan “Recent debate has focused on how to increase US exports and savings and increase Chinese imports and consumption in order to correct the trade imbalance between the US and China. In America in particular, focus has been placed on Chinese exchange rate policy. American leaders would like the RMB to appreciate significantly and quickly. They hope that this would lead to an increase in US exports and employment.”
  • H-man – Thursday March 04, 2010 08:06AM EST “I was a manufacturing executive for the past 30 years. I directly observed our manufacturing base disassembled and outsourced. The pace only increased and unfortunately continues unabated. The manufacturing jobs sent out of the country were much better paying than the service jobs that replaced them. The bottom line is now Americans can no longer just “BUY AMERICAN” and don’t have the $ to do so anyway. Greed (Corporate, Political, Individual) has killed the Amercian Dream.
  • The New Poor “Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed. Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.”
  • America tied-up by Record Debt “Smoothing out the economy’s ups and downs, however, has a cost which is now tying America’s hands. At this time when fears of a double-dip recession are rising, it’s an obvious moment for the government to apply more stimulus spending as it has in the past. But the U.S. finds itself more leveraged than ever before, limiting its options.” Small businesses need a disaster plan — and plan B(AP) — NEW YORK – Small business owners in the Upper Midwest have just gone through a disaster preparation drill as the Red River rose and threatened to repeat last year’s catastrophic flooding. The region dodged a bullet this time, but more floods may well come, and other parts of the country could see tornadoes and hurricanes. Disaster preparation is one of those tasks that many small business owners say they’ll get around to, soon. But it often gets pushed down the priority list, especially when a company is focused on bringing in new business or improving cash flow.
President Obama is doing a lot of positive economic actions in attempt to revive US economy: currently signed in laws Health Reform, imposed support for homeowners mortgage defaults, financing SMB and helping Student Financing are moves into a right direction.

A Progressive Agenda to Remake Washington With the Senate’s passage offinancial regulation, Congress and the White House have completed 16 months of activity that rival any other since the New Deal in scope or ambition. Like the Reagan Revolution or Lyndon Johnson’s Great Society, the new progressive period has the makings of a generational shift in how Washington operates.

First came a stimulus bill that, while aimed mainly at ending a deep recession, also set out to remake the nation’s educational system and vastly expand scientific research. Then President Obama signed a health care bill that was the biggest expansion of the safety net in 40 years. And now Congress is in the final stages of a bill that would tighten Wall Street’s rules and probably shrink its profit margins.

If there is a theme to all this, it has been to try to lift economic growth while also reducing income inequality. Growth in the decade that just ended was the slowest in the post-World War II era, while inequality has been rising for most of the last 35 years.

It is far too early to know if these efforts will work. Their success depends enormously on execution and, in the case of financial regulation, specifically on the Federal Reserve, which did not distinguish itself during the housing bubble.

In regard Wealth Distribution by following the last Global Recession facts are showing indiscriminate link between using Social and Infrastructural Expenses as Economic “tools” for balancing “demand-to-supply” ratios. Such trend could be changed by using an enhanced Stock and Commodities Exchanges regulated structures that would be sufficiently allowing Small to Medium Investors to invest Globally and to be able to profit from thus going Global growth: the ROI (return on investment) such SMI (small and medium investors) could become Market driven ways for Wealth Distribution; Other Market related ways for such Wealth Distribution could be by imposing common Global Markets’ regulations (for making Small and Medium Businesses equally competitive to the Large International Corporations) , enhancing Business Contracts and Bonding Laws, enhancing Intellectual Properties laws and Risk Management Personal Liability laws to prompt SMB Global expansion.

President Obama has a few key economic messages for the world: China needs to buy more stuff from other countries; Europe (and the U.S.) shouldn’t be too hasty in the push for austerity; and banks need to hold bigger rainy-day funds.

Those are the messages (some implicit, some explicit) in this letter to world leaders, written ahead of the upcoming G-20 summit and obtained by the Washington Post.

Here are a few of the key passages:

The letter doesn’t mention China by name. But it includes a passage that clearly applies to China.

For years, the U.S. has imported more than it’s exported, while China has done the reverse. Obama writes:

A strong and sustainable global recovery needs to be built on balanced global demand. … I am concerned by weak private sector demand and continued heavy reliance on exports by some countries with already large external surpluses.

This is followed by a bit that’s aimed at China’s policy of tying its currency to the dollar. U.S. officials have called for China to allow the value of its currency to fluctuate. That would make U.S. goods cheaper for Chinese consumers. (It would also make Chinese goods more expensive for U.S. consumers.)

… I also want to underscore that market-determined exchange rates are essential to global economic vitality. The signals that flexible exchange rates send are necessary to support a strong and balanced global economy.

Elsewhere in the letter, Obama addresses Europe and the U.S., when he argues that governments shouldn’t cut spending too quickly:

We need to commit to fiscal adjustments that stabilize debt-to-GDP ratios at appropriate levels over the medium term. … But … we must be flexible in adjusting the pace of consolidation and learn from the consequential mistakes of the past when stimulus was too quickly withdrawn and resulted in renewed economic hardships and recession.

Finally, he argues for a few reforms of the global financial system. This section of the letter is pretty general.

On one key subject — how much money banks should hold in reserve, and what form that money should take — Obama basically says banks should hold bigger cushions, but doesn’t get into specifics:

We want our negotiators to reach agreement on a new capital framework … that will include higher common equity requirements, tighter definitions of capital, a simple mandatory leverage ratio, and appropriate liquidity requirements.

Update: Thanks to the commenters who pointed out the typos in the post. They’ve been fixed.

mses-2010-thumb.jpgLack of funds & late payments force MSEs to perform billow capacity

Dearths of funds and delayed payments have forced the Micro and Small Enterprise (MSE) sector to perform below capacity, a study conducted by the industry lobby ASSOCHAM said Sunday. “Most of the MSEs are running at close to 70 percent capacity utilization due to paucity of funds, arising out of unduly delayed payment of their dues, resulting in serious suffocation,” says the ASSOCHAM study.

There is a Global trend toward enhancing Personal Liability laws for Corporate Risk Management. (article: “Quantum Economics-Philosophy of The Economy: Corporate and Business Structures in Market Economics”)
  • Mutual fund workers get whistle-blower cover: judge(Reuters) – A U.S. law protecting whistle-blowers at publicly traded companies also covers mutual fund firms, a federal judge ruled in a case involving two former Fidelity Investments employees.

Monetary and Fiscal Policies are to be adjusted to the Globalization and rising Productivity by Global Centralized Banking System

EU

  • Greek turmoil puts pressure on markets as loan costs soar: “The yield or return on Greek 10-year bonds topped 7.5 percent for the first time since Athens adopted the euro in 2001 but later came back to 7.35 percent — still more than double the rate on the German 10-year bond at 3.09 percent. Finance Minister George Papaconstantinou said Athens “is borrowing and will keep on borrowing” despite the record high costs imposed by financial markets.
  • Ireland hits banks with hefty penalty, to inject billions (Reuters) – Ireland hit its banks with a hefty penalty to take loans off their hands and said they needed at least 22 billion euros ($30 billion) in extra funds to recover from a property collapse that was worse than feared.
  • U.S. Stocks Retreat as Iceland, Greece Temper Economic Data March 30 (Bloomberg) — U.S. stocks retreated as concern that deteriorating government finances will derail the global economic recovery overshadowed better-than-estimated reports on American consumer confidence and home prices. Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp. lost more than 1.6 percent as Standard & Poor’s cut Iceland’s credit rating and Greece failed to sell half the 12-year bonds it offered. Exxon Mobil Corp. and Chevron Corp. retreated as oil declined after yesterday’s 2.7 percent rally. Stocks also fell after London-based Gartmore Group Ltd. suspended the manager of its two biggest hedge funds amid an investigation.
  • Ten Years of Pension Reform in Bulgaria: Achievements and Challenges These are difficult times for Bulgaria, Europe and the world. For more than ten years the World Bank in Bulgaria has been a steady partner, supporting reforms in the area of social security and pensions, both in terms of investing in the modernization of the social security administration and in terms of analytical support to ensure fiscal sustainability of the pension system – and we are delighted to respond to the Minister’s request for continued support and work with all partners towards an effective, just and sustainable pension system.
  • Government aims to boost sluggish export growth ” The Economy Minister rejected recent criticism of Germany’s export boom voiced by his French counterpart Christine Lagarde. Last week Lagarde argued that Germany’s huge trade surpluses with countries in Europe had created imbalances that were partly responsible for the budget problems in Greece and other EU nations.”Such criticism is unfounded,” Bruederle said. “Germany’s exports are increasingly becoming a motor for the economies of other European Union countries to overcome the crisis.”
  • Greece: It’s a Deal France and Germany have brokered an emergency financing mechanism to help Greece, following extensive bilateral negotiations between the two sides earlier on Thursday (25 March). Under the deal, approved by eurozone leaders after late evening talks, a funding package will be created, made up of voluntary contributions from euro area countries and cash from the International Monetary Fund. The Pain in Spain: An Economy in Crisis “JesusManson323 Spain is a leech economy. Much of its “new economy” is just Bernie Madoff-style banking sucking blood out of Latin America. It really says something that Spain did NOT start Europe’s Industrial Revolution, despite being an early colonial power that imported massive amounts of gold and silver from North/South America.”
  • Some Latin Currencies May Be Too Strong “That will be a big challenge, because right now the region gets only 2 percent of the world’s overall investments in research and development, compared with 28 percent received by Asian countries, according to RICYT, a region-wide science and technology research network. While China invests 1.4 percent of its gross domestic product in research and development, Brazil is investing 1 percent, Argentina 0.6 percent, Mexico 0.4 percent and Colombia and Peru 0.1 percent, respectively, RICYT says. Even more worrisome, the bulk of Latin America’s investments in research and development are state-funded projects on theoretical issues of no commercial value. Consider this: While South Korea registered 80,000 patents worldwide last year, Brazil registered only 580, Mexico 330, and Argentina 80, according to the World Intellectual Property Organization.

Industrial Production moved to the Fast Developing Vast Countries as China and India

China

  • India, China to Reap Reward of Global Power Shift, “Roubini SaysThe size of the emerging markets is going to become larger and larger, and it’s going to become greater than the GDP of the United States,” Roubini said. “It may take 20 to 30 years, depending on relative economic growth, but the process will occur” and “we should get used to it.”As the U.S., Europe and Japan struggle to recover from the worst recession since World War II, India’s main stock-market index has soared over the last 12 months and its economy may grow 8.2 percent in the year starting April 1, the fastest in two years, the Finance Ministry said in February. Chinese gross domestic product grew 10.7 percent in the three months through December, the quickest pace since the fourth quarter of 2007.“China has been a hare and India a tortoise but growth is accelerating in India,” Roubini said. Emerging markets are set for a V-shaped recovery, even as India still has a “massive” need for human and financial capital as well as economic-policy changes to achieve double-digit growth like China, he said.
  • It’s China’s World We’re Just Living in It “It’s easy to forget that big international bodies like the IMF and the World Bank were created by just a few nations, led by the United States. These economic organizations have global reach, but that globe used to be dominated by the American superpower, and their policies were suffused with U.S. values. When Beijing was a small-stakes player its leaders didn’t always like the setup, but they lived with it, even facing down fierce grassroots opposition to join the World Trade Organization. But now China has more worldwide clout, and public opinion at home has taken on a combative (and sometimes downright jingoistic) tone. So with one eye on China’s national interests and the other on domestic critics accusing the regime of “coddling” the West, Beijing has begun to push harder to reshape international systems to make them more China-friendly (and, in the process, to raise the regime’s chances of survival).
  • China Exports Soar 45% GrowthCHINA reported Wednesday exports soared for the third straight month in February. The fastest pace in three years as most analysts believe it could leave Beijing more open to a stronger yuan. Overseas shipments grew 45.7 % on-year last month to US$94.5 billion, the China customs bureau announced. The consistent data cements a turnaround that began in December when a year-long”

The success of China and India is not because of the cheap labor only: such cheap labor could be found around the Globe, neither it is because of the vast population only: as a whole South America counts about 400M but could not succeed consistent economic growth, nor because of “right time in history”: for the last 20 years number of recessions have plagued the World Economy (1999,2008 deadliest ), hence, why these countries succeeded in economic growth even when recessions were ongoing?

Countries with very strong Social policies and Wealth distribution and redistribution? – Maybe just because in the modern Capitalism the biggest problem is Wealth distribution and redistribution, maybe because they ignored following the taboos of “trickle-down” economics and used flexible economic policies “as it comes as it goes”, maybe because the Great Industrial Nations of US, Japan and some in EU were not flexible enough in adjusting their Economic policies to succeed Economics growth, maybe because the Big Internationals and Big investors moved to China and India as a better choice: their consistent at the same time flexible economic policies, social stability, vast population, work ethics and discipline, or finally, may be because China and India pretty much ignored the Parish Club, the World Bank and the IMF in the ways they conducted their Economic Policies: supported by strong foreign investments they changed the rules of the economic game “as it comes: as it goes”: example is the devaluation of the Chinese Currency, the strong business and financial laws against Corporate Risk Management fraud, and etc.

India

  • “Industrial output in February grew at a slower rate of 15.1 percent, official data showed on Monday. The production in January was 16.7 percent. The index of industrial production (IIP), which measures factory output, stood at 10.1 percent during April 2009-February 2010 against 3 percent in the same period of 2008-09, data released by the Central Statistical Organisation showed. While basic goods grew 8.4 percent during the period under review, capital goods grew 44.4 percent. Consumer durables and consumer non-durables recorded growth of 29.9 percent and 2.3 percent respectively.”

shishir-Jaipuria-citi-THMB.jpg‘Extension of interest subvention for garment sector by April’ Namrata Kath Hazarika | 30 Mar, 2010 The extension of two percent interest subvention to the garment sector should be given by April 2010 Read more…. » Many of the govt. schemes for MSMEs are irrelevant: Anil Bhardwaj » Budget allocation would address the additional needs of SMEs: H.P.Kumar » ‘Increase in rural demand will accelerate growth of SMEs’ » ‘Hardware + Tools exhibition a solid platform for industry players’ » Consolidation need of the hour for SMEs in textile industry

  • ‘Indo-Canada trade standing at USD 4 bn annually’“He also mentioned that India stands out in the world, as an emerging market with a strong democratic base, fully functional in English – the worldwide accepted business language, as a country where the rule of law pervades and as a country that survived the economic recession. During the interactive session with Canadian business associations – Canadian Council of Chief Executives and Canada-India Business Council, organized by CII, it was widely recognized that India’s growing middle class and nation wide policies for inclusive growth present tremendous opportunity for participation by Canadian companies.
  • Govt. clears 23 foreign direct investment proposals“Among the approved proposals were Tikona Digital Network’s Rs. 1,142.21 crore offer for rasing the FDI to 74 percent by issue of compulsorily convertible debentures and Pune-based Bharat Forge’s plan to issue warrants worth Rs.576 crore. Opto Circuits India’s proposal to issue convertible warrants worth Rs.376.27 crore and a request by Intel Capital — the Mauritius-based investment arm of the computer chip major Intel — to acquire equity in the Multi Commodity Exchange of India for Rs.66 lakh also received the nod. The government put off decision on several proposals, including the offer of Gurgaon-based S Tel Private Ltd, a joint venture between Chennai-based Shiva Group and Bahrain Telecom, to issue fully paid-up fresh equity shares to undertake the business of providing telecom services in India.
  • Indo-African trade to grow by 22 pc in next two years’ “The bilateral trade between India and Africa is likely to grow by 22 percent in next two years, according to an ASSOCHAM paper released in the capital on Friday. “It is projected that bilateral trade between India and Africa could be around USD 55 billion in 2012 from the current levels of close to USD 45 billion,” said Arun Agarwal, chairman of ASSOCHAM’s Africa Committee.”

The exodus of Capital from North America and E.U. had a deadly effect on their Fiscal Quantities (GDP of any country in the World and the most of Developed Industrialized Nations is based mostly on Industrial Production and Return On Investment ROI mostly from Industrial Production).

Japan, Germany and France succeeded in retaining some of their High Tech Industrial Production but both Japan and Germany among others were overrun by China: Japan as the Second Biggest World Economy and Germany as the Biggest Industrial Exporter, however Germany, France and Japan have balanced their internal demand by strong Social and Infrastructural Policies much better than many other countries have done it.

Japan

  • Applications for employment adjustment subsidies fall in Feb The government grants subsidies to companies which have opted to maintain employment instead of dismissing workers by shortening the hours they work, for example. The subsidies are to make up for a wage decrease resulting from shorter working hours. The number of workers for whom subsidies were applied came to 1,608,149, down 119,066 from January, the ministry said.

  • The Global Debt Bomb: “Today Japan can borrow all it wants from its own citizens. Over the decades they have dutifully (if mechanically) piled up a $7.7 trillion cache of savings they keep mostly in low-yielding bank deposits. Those savings equal two-thirds of the total household wealth of Germany, France and the U.K. combined, says John Richards, North American head of strategy at RBS”

Japan’s consumer prices continue to fall

By Roland Buerk BBC News, Tokyo Japanese exports are rising, but deflation at home is cause for concern Japan has been in deflation for 12 straight months, figures released by the government show. Prices fell by 1.2% in February from a year earlier, threatening the country’s recovery from recession. Japan’s economy has been periodically plagued by deflation since the “lost decade” of the 1990s, which led to years of stagnation. The prospect that goods will become cheaper in the future makes consumers reluctant to buy today. This leads to a vicious circle of falling company profits and wages. Downward trend The latest figures – where the core consumer price index fell by 1.2% – is not as bad as in previous months.

Germany

Euro zone deal points to a more German Europe (Reuters) – The masks have fallen. From now on, we will all be living in a more German Europe, with economic policy driven by Berlin’s hair-shirt export-or-die model. That is the lesson of a deal among euro zone leaders on a financial safety net for debt-stricken Greece, adopted largely on German conditions on Thursday after months of wrangling that battered confidence in the single European currency.” The politics of the EU are undergoing a fundamental change at present, with Germany becoming increasingly willing to cast off the shackles of the past and make its voice heard,” said RBS analyst Timothy Ash in a research note.

  • China And Germany Unite To Impose Global Deflation Chindia, invented by Jairam Ramesh, an Indian politician, to describe the composite new Asian giant. Let me introduce you to Chermany, a composite of the world’s biggest net exporters: China, with a forecast current account surplus of $291bn this year and Germany, with a forecast surplus of $187bn (see chart).”
  • MF: German economy to grow faster than expected The International Monetary Fund is cautiously optimistic for Europe’s biggest economy this year. It expects the German economy to expand by 1.5 percent in 2010. Global growth is estimated at 3.9 percent. (26.01.2010
  • German economy records biggest slump in post-war history The Federal Statistics Office announced on Wednesday that Germany’s largely export-driven economy recorded its biggest-ever decline since World War II last year. The country also breached the EU’s deficit limit. (13.01.2010)
Audios and videos on the topic

· The new OECD survey (26.03.2010)

· The OECD offers a cautious forecast for Germany in its 2010 survey

France

  • Sarkozy ready to trigger EU ‘crisis’ to protect farm subsidies “President Nicolas Sarkozy addressed the nation Wednesday for the first time since his party’s defeat in regional elections. He vowed to push on with reforms and said that he is ready to provoke a “crisis” in the EU to defend French farm subsidies.”

Slight upturn for Paris region but no new jobs yet “2010 will be a slightly better year than 2009 for industry and service sector companies in the Ile-de-France region which includes Paris and the surrounding area. According to the Bank of France’s annual report – based on a survey of some 2,000 companies – 2009 was a year of stark decline in both sectors. But for 2010, companies are expecting business volume to rise again – slowly but surely. “The Ile-de-France region is particularly dependent on big companies which have a high degree of international exposure, and it has suffered” from the global crisis, the Bank of France says in its report.” Change in performance per sector (2009) Intermediate goods (wood, rubber, paper etc): -19.7 % Automobiles: -15.2 % Plant and equipment (electronics, aeronautic, rail etc.): +0.5 % But it expects the region’s industrial activity to see an upsurge of some three per cent in 2010. The companies rely on consumer borrowing to individual households, which has remained stable. But there was a sharp decline in investment in 2009. Rejecting claims this might hinder growth this year, the bank’s regional director Bernard Tedesco said, “If we’re dealing with full order books, growth can happen quickly. Investment activities have simply been postponed. And never have conditions been as favourable for companies as now, with interest rates at a historic low.“ But the outlook for employment remains grim, according to the report. In 2009 companies in the region laid off 4.5 per cent of their staff, and another 1.4 per cent are likely to lose their jobs this year. “Low profits mean that the CEOs are cautious. The job sector will be the last one to grow,” says the report. Industry and service sector performance (2009 and 2010) A survey among industry and service sector companies in Ile-de-France The study was conducted among 1,022 companies from the industrial sector (producers of industrial or electronic machines, textile, automobile, consumer goods), as well as among 947 service sector companies (transport, merchandising, computer engineering, temporary work). In the Ile-de-France region, more than 300,000 people are employed in these two sectors. Industry: Business volume: -12.3 % (2009), +3.0 % (2010) Export volume: -13.6 % (2009), +2.8 % (2010) Service sector: Business volume: -5.2 % (2009), +1.7 % (2010) Export volume: -10.8 %, -5.6 % (2010)

The information and links provided above are to prove that the new trend in Economics differs from the “trickle-down” Capitalism: just because there is not trickle-down of capital to the US market but only trickle-up and trickle-down capital to the Chinese market, also to prove that all tools of economics are to be randomly used “as it comes as: as it goes” as these are used in China and India instead of ideologically used as in US. Pragmatism is about to rule the Science of Economics to the rest of this Century.

Production Economics and Marketism©

Quantum Economics-Philosophy of the Economy

Production (only) based economics tighten its monetary policies and financing guidelines on economic indicators reflecting growth in production (could be agricultural, industrial and partially services). Thus it (production based economics) curtails inflation by preventing economies from harmfully over-expanding monetary supplies. Production based economics are all currently used systems: radical capitalistic (like US, Japan), socio-capitalistic (EU, China) and anybody else cracking in between, and communist (Cuba, Venezuela). The Paris Club, World Bank, IMF and WTO (lenders-which capital quantities are coming from the developed capital markets of the developed countries such as US, Great Briton and now China) are establishments that follow the ways of production based economics; these establishments’ policies and lending matrix require tight deficit and budgetary control over borrowers mostly less developed countries and markets; lending is done on relatively high interest rates and borrowers are watched closely; their budgetary policies are scrutinized. Thus borrowers are controlled on a daily basis so borrowers are prevented from wrongfully overextending their budget (social, infrastructural, etc. expenses); the usage of Internet has helped lenders to tighten control over borrowers therefore the countries borrowers have much less flexibilities to avoid this “hug” or spent a few dollars over the limit for Social expenses or fix a bridge or two over the limits set to them by lenders. The brightest of the brightest minds are hired by lenders, these mostly young guys would not spare a thing some time to their own nations if borrowers twist the rules anyhow, they thoroughly believe in the system of production based economics.

Production based economics is a reasonable philosophical conception defined very precisely by Karl Marx in his “Capital-Critique-Political-Economy” and clearly very precisely explains dialectic cyclically self-adjustable periods of an economy of Capitalism, which economy in different proportions apply to the economies of Social Capitalism and Communism and overall to any system of economics taught ever after by any educational institution from East to West; when even in Communist economics throughout nationalization of industrial tools of production the people as owners of industries are sharing the profit “equally” instead of big fat capitalists smoking cigars taking the profit, they the people (whatever in reality it means) were reinvesting ROI and enhancing their standard of life ( in reality blah, blah , blah), but still the economics of Communism is a production based economics;

Has the production based economics really worked?

Most definitely: yeas, it worked even by experiencing difficulties such as the Great Depression the production based economics and its following financing and controlling practices were in the foundations of any most developed and developing country and market in the world: from the USA and Germany to Japan, these countries and their economies were developed by the system of production based economics: that how they avoided economic crashes, inflation and deflation, that’s how they enhanced their standard of life reaching far better life conditions compare anybody else’s; for any poor country these guys reached the sky…. And they did, but

What new happen that makes production based economics inflexible and inadequate?

Actually, what happen were mostly products and achievements of production based economics:

  • Eastern Block Communist countries change their totalitarian systems and embraced Freedom (which wasn’t a political act but a consequence of inadequate economics: these were the most sensitive to the new developments in a Globalizing marked with constantly rising productivity in the rest of the world: lock of competitiveness knock them off)
  • Almost any country in the world started pushing toward normalizing international relations and opened their markets
  • China become a member of WTO, open Her economy for investment and private enterprises
  • European Union started expanding East and Southeast following aggressive ante-corruption policies in any member country and establishing number of low interest and subsidiary funds for development and promotion of environmentally friendly projects
  • In the USA productivity was raising wild when risk-management and intellectual properties were becoming most powerful weapons too ?!? getting into China market. Capital was concentrating into smallest and smallest percentage of the population, and middle-class income growth after 2000 came to a hold
  • High technologies and concentration of capital were making industrial production and farming easier to export: start-up, expand and enhance very quickly elsewhere in a short time limits
  • Internet allowed people from elsewhere to exchange information and ideas thus making the world a small place; access to self-education and new inventions, new marketing strategies and new media approaches
  • Etc

All of the above and many others were the new events and developments brought by the new Globalization some of which (events and developments) are totally experienced for first time, but the most important are the Environmental issues result of long years of indiscriminate pollution by most developed and developed countries industrial revolutions. Environmental issues of Global worming are not just concerns but scientifically proven facts that effect anyone living on Earth; production based economics is based on industrial production profit driven therefore high technologies for generation of renewable energies, technologies for cleaning emission of manufacturing plants are very expensive proposition in a highly competitive world: for US practically implementing Environmentally friendly technologies would make for many businesses difficult to compete to China, Russia and India when even without such burthen competition is fierce. Not the least is the widespread poverty around the world in where countries and markets are barely having enough production to feed their populations then to seriously consider adopting expensive Environmentally friendly technologies and working toward better environment.

Production based economics does not use economic tools to deal with most of these new developments:

  • Not all countries in a Globalizing market could become industrial: first, because they cannot compete countries like Germany, US, China and Japan that basically are capable to flood this Global market with manufactured goods; second, if all these countries go through industrial revolutions to become industrialized the pollution would be unbearable to the Earth environment
  • Even very developing countries like China and India should not go throughout industrial revolutions in the old known ways themselves that they could destroy the world easily
  • In the existing financial system of lending no country but the lenders could subsidize their economies if needed to reduce emissions and improve environment (when even these countries as explained could not do it on a large-scale to not becoming uncompetitive)
  • Last Global recession showed that deregulated production based “trickle-down” Capitalism did not establish “release valves” for handling over-capitalization neither “preventive regulatory policies” to avoid it: the wild-wild-west trickle-down theory of economics did not estimate that instead to trickle-down the capital went oversees being invested in more stable markets, or just was not invested in man-engaging industries in the US particularly when in there these were not competitive and less profit generating)

What kind of economics could enhance production based economics to address above issues, and make ongoing Globalization possible?

Changes in Western economies are naturally ongoing: governments are financing lending institution and insurance conglomerates, buying shares in manufacturers and subsidizing agricultures…. Governments in most developed countries are doing what they can to save their economies from total collapses and this process will continue in the future in and out, but:

Is this kind of Governmental interferences in markets most helpful to these markets approaches to handle world recessions and are there better ways?

The change of production based economics could be changed possibly by an economics of Marketism based on parameters and economic tools to accumulate over-capitalization, and deal with inflation by using “artificial methods” to avoid recessions, using central banking with allowance to issue capital and lend under low-interest rates to a World with better security

21st Century Global Financial System of Market Economy In the 21st Century currently existing Global Financial System leaded by US and other Most Developed Nations (incl. China) and managed by the Parish Club, WTO, IMF and the World Bank must change their approaches to apprehend the most recent developments of chronically becoming indebted World, in which except for a very few countries and market as China and India, most of the rest Most Developed Economies as US and GB, Developing Countries as Spain, Portugal and Greece, and Undeveloped Countries as Bulgaria, Rumania and many South American Countries, Asian and African Countries are greatly indebted or very underdeveloped. A Central Banking System is needed to control the global “demand-to-supply” balance by being able to issue capital, instead of the current global financial system which performs more as a “lender”. (SEE:How Globalization affects Countries & Markets” below There have been many indications that the process of running fiscal shortages for many countries cannot be reverse by using current Economics of Production based “trickle-down” Capitalism, because the Production based Economics is generally founded on industrial production that adds the highest percentage to any country GDP (General Domestic Product) and the consequential fiscal reserves for a country or a market to develop most definitely such country following the economics of production must industrialize, or for an industrialized country such must keep being Globally competitive in industrial production to maintain intact its deficit. The Globalization of the market place propelled by the great Capitalization and the rising Productivity have boosted the economies of China and now India to industrialize rapidly, that industrial power added greatly to the current industrialized economies of Japan, Germany, US capacity by how the Global industrial production capacity overall is coming to a point of great concentration of such industrial production into a very few industrialized economies. The possibilities for other small or even big countries to become competitive in industrial production and maintain their fiscal policies and reserves in tact are diminishing. SEE: “Market Economics” From the Most Industrialized Economies US is particularly vulnerable under these new Global developments of ongoing exodus of industrial production and capital investment to the Far East. The Capitalism of US Economics is very inept in distributing and redistributing Wealth so to speak the “demand” side of Capitalism correlates the “supply” and works well in a close marketplace in size of US market when “trickle-down” capital first “trickle-up” to concentrate wealth then comes “down” to create industrial production, but than when such “trickle-down” does not go to the US market but to elsewhere the shortage of consumption cannot be avoided, following in not properly balancing “demand-to-supply”, thus, to avoid economic catastrophes US Government steps up with infusing capital into the system: exactly what happen at the last Great Recession of 2007-2009. Also in time of narrowing ROI (Return Of Investment) particularly for the SME (Small & Medium Enterprises) and from the SMI (Small & Medium Investors), in time of Governmental policies promoting and tolerating pro Big Business and Big Investors deregulated “trickle-down” Capitalism which were mostly the only ones benefiting from the ongoing Globalization, the possibilities in such times for occurrences of Economic Bubbles are quite common. The 1999 Stock Exchange Bubble and the 2007 Great Recession are products of appointed lack of Wealth Distribution. Thus become obvious that the Government in situations like that step into actions by infusing capital, save even individual businesses and prompt social distribution: The Healthcare Reform, the Finance Reform, and the US SME Tax Reform are good examples how the system in distress works, though the consequences are up to be seen. It is hard to believe that the US Government could constantly manage the Economy and create business. In the Next Recession the Government will appropriate more function in financing and business that overall is a scary preposition having in mind how inflexible and inept a Government could be. SEE: “Business Exchange – Market Economy Environmental pollution and Earth exhaustion of resources under the current production economics based on industrial production mainly is unavoidable, because when even most developed industrialized nations could introduce and follow policies of protecting the environment, or even the developing nations of China and India follow up which is highly doubtful, there are many countries that will try to manage their fiscal shortages by compromising the rules for Environmental protection thus they can bring to their soil industrial production. In the World of ROI mostly from Industrial Production the prices of Environmental protection technologies are making businesses hardly competitive to others that do not implement these. Pollution comes also from cutting and burning woods to farm or from heating with coal, or from driving old autos, or from dispose sewers into open rivers. So to speak, without curbing on the Global poverty can not be ways to curbing on pollution. But to curb on poverty industrialization cannot be used thus the possibilities for saving the World from Environmental disaster by using industrial production are highly unlike. SEE: “Environmental Issues of Market Economics” To avoid multiple economic crashes and upheaval, to avoid The Government take over when next recessions, to avoid fiscal shortages and deficit, unemployment and poverty, to avoid Environmental destruction a new system of economics is needed, one that will allow countries to develop without being industrialized. Is it possible to manage Global development without using current production based economics system?

  • Well the most recent US and any Governments’ infusion of monetary quantities, business involvement and social distribution of wealth is not based on production economics.
  • The Chinese approaches in handling Economy is not production based only economics: their interference in the ways “trickle-down” capital works in the marketplace does not follow Capitalism but is more-like “artificial” flexible usage of economic “tools’.
  • The Greece bailout by the EU and IMF is not “trickle-down” economics; it is an interference with the powers of the Capitalism.
  • There are many more examples of how Governments and organization interfere with freely flowing Capital and therefore using “artificial” methods of economics.

At the moment he mounting debt accumulated by almost any country in the World horrify economists and they predict imminent bust-and-doom (there was a suggestion by some German politicians to Greece to sell some Greek islands, but then funds has been appropriated help Greece). Though economists should be horrified only from high imbalance of “demand-to-supply” ratios, which imbalance provokes inflations and deflations; thus should be the biggest concern to the Global Financial Institutions instead these are fighting deficit and debt: these institution as mentioned above are acting more-like a “lender” then a “controller” these should be. If the Global marketplace is seen in its vastness as a common marketplace a mass industrialization should not be expected and cannot be achieved therefore. Thus, for balancing “demand-to-supply” ratios, the Monetary Policies should be used instead industrializing the entire Earth. Comprehensive Monetary Policies by Global Financial Institutions flexibly using Monetary Quantities as Economic “tools” and Business and Financial Regulations as enhancing business “security” are “the way to Rome” only. Less Governmental involvement in business, more business laws and regulations on business contracting, business and project bonding, intellectual properties’ laws, risk management personal liability laws, and etc, these the supplements to an appropriate Monetary Policies: because these “regulatory” actions will enhance SME and SMI “security” and make these much more adequate to be financed. Low interest rate financing and subsidizing are economic “tools” to be used by a Global Financial System in promoting environmentally friendly renewable energies and agriculture, environmental tourism and sustained growth. This new financial system must use commercial banks to invest in countries on project by project basis on set matrix and low margin. joshua.konov@gmail.com ©Joshua Konov, 2010

Bonding as Tool for Sustained Economic Growth

In the modern financial system bonding is requested on large and governmentally subsidized construction projects. To be sure that a project will be executed with needed quality General Contractors and even the Subcontractors are required to be bonded as a precondition for even bidding on these projects. To acquire bonding a company is underwritten by the issuer or the bond holding company. “Construction bonding is a risk management tool used to protect project owners and developers. A bond constitutes a legal guarantee that the project will be completed as expected. In instances where a bonded contractor fails to perform, the bonding company will provide some form of restitution to the owner. While bonds are not required on all projects, there are strict bonding standards on government work. Many private owners and developers might also require bonds to protect the interests on various projects. Read more: What Is Bonding in Construction? | eHow.com http://www.ehow.com/about_5295907_bonding-construction.html#ixzz1D5BP7nzH Bonding is a financial tool that enhances the security to investors, developers and owners on projects. Another tool used in construction business is Mechanics Lien that basically is a security for GC and Subs so they can get paid on construction projects: Mechanics Lien is used on any-kinds of projects large to small, and even it (Mechanics Lien) may slightly differ from State to State the difference is not any great. Mechanics lien is a financial tool used in construction business that provides additional security to General Contractors and Subcontractors to ensure proper payments on construction projects. These economic tools are not perfect bringing lawsuits and long financial disagreements, however without them construction business would be in total chaos bringing these disagreements to longer terms. Bonding and Mechanic Liens are tools that could be well adapted in other sections of the business law which could enhance Small and Medium Enterprises security and afterward make SME lending much easier and less risky. Breaching contracts by not executing payments by Big Businesses to the SME is a very painful to the whole US economy with consequences taking many SME to bankrupts, and putting on the streets many SME employees: it is well-known that more than 80% of all employment comes from SME. Especially when economic crisis occurs Big Businesses tend to stop payments or negotiate Contracts price reduction in accelerating rate, thus, economic crisis deepens and effects US economy most painfully. Unless Big Businesses that are Global and could switch operations or even file multiple bankrupts and then rise as winners, for SME such bankruptcy filing are very often deadly and many are getting sold looking for equity or even close operations. The trickle-down approaches of currently used Economics of Capitalism promotes and serves mostly Big Business, and the system worked well because the concentrated capital through such “trickle-down” brought industrial productions down to the US marketplace, but this process of Free Capitalism was totally interrupted by the Globalization and rising Productivity on an ever expanding Global marketplace where the previously “trickling-down” to the US marketplace capital started “trickling-down” to China and elsewhere else. Large Corporations and Big Investors are moving, outsourcing, and investing to elsewhere in where ROI and projections for better ROI were much better, thus, US marketplace was left to SME to employ the majority of the US workforce when in the same time the “old” support for these Big Guys is still in place. US Government intervention to the Great Economic Upheaval in the last few years was a result of the exodus of the Big Businesses and Investors from the US marketplace. However what was done was a natural reaction to the Globalization and if rightly used it (the Globalization) could bring good to America, as long as these processes are rightly evaluated and actions for improving the situation are taken promptly. One of the things needed for such Globalizing economy is the Bonding, ability to put Lien and correlated Business Contracting business law and regulations that can help SME to become more lend-able. joshua.mcng@yahoo.com (For more see: Business Exchange: Market Economy) ©Joshua Konov, 2010

Quantum Leap in Market Economics

Quantum Economics-Philosophy of the Economy-Quantum Leap in Market Economics In market economics economic tools (quantum economics: parameters) are used indiscriminately (not politically motivated but statistically formulated) to maintain balance (quantum economics: grid or quantum quantities) demand-to-supply ratios; Compare to currently used production (based economics that should be using self-adjusting dialectic economics of trickle-down approaches for development. Because, economic tools (parameters) are “artificially” applied to limit over-capitalization or under-capitalization effect on real economies and markets, these (economic tools, parameters) may well be used to increase or decrease different parts of economies, markets by artificially accelerating or slowing business activities. In modern times ecological issues are becoming extremely relevant to Earth survival: developing and less developed countries’ industrialization (considered by the standards of production economics only ways for development) will destroy Earth either by polluting the environment to point of no return or by exhausting Earth resources to point of no return: both scenarios Earth will not survive such mass industrialization; In third scenario if developing and less developed countries and markets are pressed to stay as these are by using financial means and these (developing and less developed countries and markets) remain in such underdeveloped condition these still are growing in population and gradually polluting Earth and destroying Earth resources in much higher than most developed countries and markets rates; also in deregulated global market environment when environmental rules and regulations are obeyed by most developed countries and markets but not obeyed by other markets then industrial production will move to deregulated areas thus pollution is unavoidable in current production profit (only) based economics. Quantum Economics Leap or Quantum Leap is ‘controlled’ economic jump executed by pointed use of financial means (low rate business loans and subsidies) to different areas of real economies and markets {particularly less developed countries, markets or parts of markets (in this category: parts of most developed countries and markets’ underdeveloped areas could be considered)} Predominantly, development of less developed countries and markets, or parts of markets should be directed toward environmentally friendly technologies: renewable energy sources, organic farming, environmental tourism and etc. In economics of Marketism countries and markets should not necessary become industrialized to raise their life standards and development is not (only) related to industrial production: Question: Where industrial good will come from to bring needed supply to such growing demand from non-industrial development? Answer: It will come from globalizing rapidly expanding production of countries and markets of US, Japan, China, India, etc. Globalization of industrial production and rapidly rising productivity could provide needed industrial and high-tech “supply” to growing by quantum leaps consumers “demand”; to prevent from imbalances of demand-to-supply ratios central banking system should be established that uses formulas for monetary quantities and fiscal quantities and precisely applies economic tools (parameters) to limit economic recessions (quantum economics: energy buildups and consequential big waves). (See: Quantum Economics-Philosophy of the Economy-Monetary Quantities Formulas and etc related articles). Joshua Konov, 2010 joshua.konov@gmail.com Carnegie Endowment for International Peace Globalization and the Developing Countries: The Inequality Risk “My task is to talk about globalization and inequality in developing countries, with emphasis on Latin America. I have a simple point to make: globalization puts developing countries at risk of increasing income inequality. The increase in inequality in the United States over the last 25 years (during which the income of the poorest 20 percent of households has fallen in real terms by about 15 percent) has been blamed, rightly or wrongly, on changes in trade, technology and migration patterns associated with increasing economic integration with other countries. For developing countries, any risk of increasing inequality associated with active participation in the global economy is even greater, if only because of the greater inherent institutional weaknesses associated with being poor. Latin America has a special disadvantage: its historical legacy of already high inequality. Inequality that is already high complicates the task of effective conflict management, which Dani Rodrik has just reminded us is a critical input to managing open economies. In the past, for example, high inequality combined with the politics of redistribution led to periodic bouts of populism in Latin America – ineffective and counterproductive efforts to manage the conflicts provoked by the dangerous combination of high inequality and hard times.”

Quantum Economics-Philosophy of The Economy-Environmental Policies

Some people probably would suggest I started the conception of Marketism with the effect such economic expansion would have on the Global environment, to whom and anyone else concern about pollution very close to destroying our World this article is directed to. Here, I would directly disagree with the “Theory of Scarce Resources” and this is not because the Global Resources are limitless or somehow these resources are enough for the entire population in the way these resources are used and have been used: in the opposite the Market Economics called Marketism is about economic growth synchronized and constantly adjusted to the most advance renewable energy sources and high technologies reducing and totally eliminating pollution. In context I am tired of hearing about how the majority of the World population should live in poverty not using the existing Global resources in order a very small percentage to be rich and prosperous to live as they do, therefore the majority should be artificially kept less developed. For these “philosophers” I have the following answers: · Deregulated “Trickle-down-Economics” mixes “freedom” in business is more like “wild-wild-West” where alone with the “good guys’ obeying laws and protecting the weak are the “bad guys” disobeying laws and skimming the World as much as they can. To the proponents of such “freedom” of business I will say freedom is about the rule of law and the goodwill of the wealthy guys to take care of us the rest might well be not there. Same with the Environment that has to be protected by the rule of law not by the trickle down freedom and will be better protected as well. · The constantly enhancing the way of protecting the Global environment is in conflict with the production based economics of Capitalism, Socialism or Communism and in synchrony with the investment and intellectual properties based economics of Marketism which Monetary Policies are adjusted by current possibilities of the Markets. · An advance of High Technologies and Expanding Investment combined with regulated Global economics structures including tight Ecological regulations will reduce wasting of these resources. · Until now the pollution has been mostly generated by the most developed areas of North America and Western Europe, but in the same thought the biggest reduction of pollution for the last 10 years has been there too, so unless the rest of the World does not jump over the industrial revolutions already gone in the West the pollution coming from these under-developed markets will finish us all. · The use of resources could be a lot less by developed markets then by slowly developing markets, cutting of wood and using of coal for heating is a perfect example of that. Resources such as petroleum and even water are wasted much faster by developing markets then by developed markets when these markets are part of the Marketism. · High Technologies could be adapted only by advanced markets to lower pollution. · And here I will come back to the rich or wealthy as a better description: in a World where more then 80% of all production is based on consumption only by expanding the consumption could expand their capital too, finally they are the keepers of the Capital and in a foreseeable future I don see them replaced. · To use renewable sources of energy and enhanced system of production with no pollution in a short and only way to avoid total Global crash is by changing the economics into market driven Marketism. © Joshua Konov, 2009

Inflationary and Deflationary Forces “Artificially” adjustable in Market Economics

Inflationary or deflationary forces are to be curtailed by using economic tools (in quantum economics ‘parameters’) indiscriminately (non-politically motivated but based on statistical indicators and formulas) to limit real economy (in quantum economics “grid”) from violent fluctuations and vibrations that could provoke economic recessions (in quantum economics’ big waves’). General balancing of demand-to-supply ratios is needed to avoid economic recessions;

Quantum economics is founded on uncertainty therefore avoiding big waves is probability not certainty: in such system of probabilities parameters and probable expended grid (quantum quantities) should be used by first, parameters to disperse and limit over-capitalization or other imbalances, and second, probable expended grid to absorb such economic over-capitalization or other imbalances.

There are close similarities between currently used system of production (based) economics and management of monetary quantities and fiscal policies in ways inflation or deflation is curtailed{see: related articles ‘Quantum Economics-Philosophy of the Economy- Inflation and Marketizm, ‘Quantum Economics-Philosophy of the Economy-Monetary and Fiscal Policies’, ‘Quantum Economics-Philosophy of the Economy- Formulas for Monetary Quantities’};

Main difference between production (based) economics monetary quantities and fiscal policies, and market economics of Marketism monetary quantities and fiscal policies is additional expansion of monetary quantities and fiscal quantities because of added expendability of industrial production by ongoing globalization and rising productivity, and because of extra security added to markets by enhanced regulatory system (business structures personal liability, business contracting equalization and personal liability, financial and commodity exchanges’ laws and liability, etc); thus from one side accelerating business activities in global marketplace and low interest rates and subsidiaries financing of social and infrastructural’ projects, and environmental projects can provoke ongoing growth of demand added security on marketplace may provoke high growth of industrial and other production; Extra business regulations and laws effect on business activity is overall balanced weights on business activity makes it more complex and difficult from other side such (effect from enhanced business contracting and business laws) adds security to business: making businesses more lend-able, and also equalizing SME to big businesses competitiveness on marketplace: by clear business and intellectual property laws and regulations, and codes in long term will establish a stable equalized competitiveness to all participants and will prompt economic growth, therefore problems will relate balancing such growth to the demand instead supply side inflation: deflationary forces (fluctuations) may become bigger issue then inflationary forces (fluctuations):  however economic tools of social policies, building infrastructure  and environmental protection’ equitability are to be used as balance against deflation as well. where from other side because from one side such Globalization of industrial production and rapidly rising productivity could provide needed industrial and high tech “supply” to growing by quantum leaps consumers “demand”; to prevent from imbalances of demand-to-supply ratios central banking system should be established that uses formulas for monetary quantities and fiscal quantities and precisely applies economic tools (parameters) to limit economic recessions (quantum economics: energy buildups and consequential big waves). (See: Quantum Economics-Philosophy of the Economy-Monetary Quantities Formulas and etc related articles.

© Joshua Konov, 2010

What $10.10 would mean for you


Market Development Verses Economic Growth


Market Development Verses Economic Growth

 The global industrial overproduction capabilities have been gaining momentum accelerated by ongoing globalization, rising productivity, China’s industrialization, the Internet and mostly by the vastly improving high technologies in manufacturing, communications, and international trade. The Transnationals have been given great advantages to find new cheaper markets that they could relocate or outsource industrial production, whereas the huge Chinese marketplace has provided them the needed demand to expand and aggregate their capitalization and economic health even in the time of 2007-9 Recession and post recession time. Simultaneously to the rising profit of the transnationals and big investors, declining industrial employment, middle class, and fiscal reserves have been observed in the United States, many European countries, and Japan, the manufacturing jobs that used to replenish fiscal reserves and maintain large middle class have largely disappeared being moved and outsourced, moreover the industrial jobs still left in there have been highly robotized bringing down salaries and numbers of employed. The low paid jobs that have been gaining in post recession time could not compensate to the lost high paid industrial jobs from the past. In general, capitalism relied on industrial jobs and high interest lending rates to raise profits, boost economic growth and replenishes fiscal reserves; however, none of these three points is working under the conditions of most recent market developments, whereas aggregated super-production, moving, outsourcing, the long-term and deep 2007-9 recession and post recession time, and e.g., made these three points, which are founding for the capitalism, obscure and under-performing. Hence, the governments are keeping their discount tier one interest rates close to zero, but the poor transmissibility of the economies is establishing the condition for new market bubbles instead of boosting higher percentage economic growth with high employment and salaries in manufacturing. The idea that manufacturing will come back to the US, or most European countries to employ the high single and double digits unemployed is unrealistic in its nature. The austerity measures in UK and Europe, the quantitative easing and stimulus packages in the US, UK and Japan, and the stimulus programs in China are temporarily economics tools capable of reviving business activities of mostly lower paid jobs in service sector, however the majority highly paid industrial jobs are gone forever being undercut by high technologies, and moved or outsourced elsewhere, therefore the capitalism could not work out these economies to sustain adequate economic growth to balance rising fiscal social and infrastructural expenses.

 The main carriers of economic growth in the capitalism are big transnational corporations and big investors, which were suppose to stir economic growth by raising productivity supported by trickling down capital. Moving and outsourcing industrial production to wherever cheaper and qualified labor is found, these two economic agents are considered the noise in (1=f noise) formula for every country/market economic development that is suppose to close underdeveloped economies to the developed industrial ones. Hence, low taxes, low regulations, shady not particularly clear business laws, and corporate contracting are the keys to progress, industrial employment, and economic growth. However, for the last 20 years the system of capitalism greatly under-performed the 1=f noise formula has not worked, the middle class deteriorated, the manufacturing jobs are gone, and the business activities are shrinking lacking demand balanced marketplace.

 Moreover, the economic growth, which was suppose to keep at the least as high as to compensate for the natural energy related price rising could not keep up marginalizing into the very low, or like in EU into the recessionary minuses. The deflationary forces have been gaining strength, whereas Japan is the good example of it. Thus, the market forces pressure has degenerated economic growth into market development, however neither the overall financial system, business laws, lending approaches or market security have been adapted to the natural processes of this ongoing change, thus instead of a sustained market development be succeeded and maintained the economies continue accumulating fiscal debt, and under-performing with high unemployment and underemployment. The ideologies are ruling over the clear indicators of a system, which has exhausted its growth generating powers.

 Economic growth differentiates from market development by its fundamental change of priority from big business and investors as main economic agent for economic growth to small and medium businesses and investors as main market agent for market development. Hence, the economic tools such as high lending rates, shady business laws, deregulated financial system, tax breaks for the rich, limited liability corporate structures, cutting down on social and infrastructural expenses, e.g. that worked to boost economic growth are to change into more sophisticated deleveraging diverse business environment using market tools such as enhanced business laws, unlimited liability corporate structures (to the decision making corporate structures – not to the investors), higher market security allowing lower lending rates, using social and infrastructural expenses as an extra equity demand, e.g. that overall will provide better balance to demand-to-supply markets. Market development is an enhanced version of the trickle down capitalism that rely basically on market forces to balance markets demand-to-supply but uses indiscriminately market tools to keep this balance in marginal proximity.

Joshua Ioji Konov 2012

Market Economy under Ripid Globalization and Rising Productivity


Market Economy under Ripid Globalization and Rising Productivity

Abstract

Market economy of enhancing business laws in contracting, bonding, insuring, legal corporate structures[1], e.g. will marginalize the economic agents and tools that make market competition unfair, empower small and medium businesses and investors, and boost business activities, fiscal strength, employment, and capital transmission. Keynesian capital infusion will extend its market effect in such higher security marketplace.


[1]The law of unfair competition will not penalize a business merely for being successful in the marketplace and will not subsidize a business for failing in the marketplace. Liability will not be imposed for aggressive, shrewd, or otherwise successful marketing tactics that are not deceptive, fraudulent, or dishonest. The law will assume, however, that for every dollar earned by one business, a dollar will be lost by a competitor. Accordingly, the law prohibits businesses from unfairly profiting at a rival’s expense. What constitutes an “unfair” trade practice varies according to the cause of action asserted in each case.

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