Why the Enhanced Business Laws would raise Market Security


Why the Enhanced Business Laws would raise Market Security by Joshua Konov

 

In times of the relatively “easy” business of the past, the pro-supply economies were boosted by loosen business laws and regulations, which prompted quick start-ups and flexible setups. The manufacturing mills were becoming smaller and more productive, the profit margins were good, the employment was high; and then the Capitalism was ruling the world: America was growing in a steady 20-25% every 10 years; there were the 60s and the 70s, up for Centuries before. Freedom of business and personal freedom were the most valuable commodities that boosted optimism into a system of trickle down economics, by which wealth was trickling up to come down in the properties of progress and economic growth. The large corporations were taking over the world by bringing unknown goods and services around the world: American inventions and values were carried-on by them. In such an environment, business laws and regulations were considered rightfully as stoppers of progress, and such conclusions were correct.

 

However, the world has been changing; the large corporations transformed into transnational conglomerates using the opening of many markets and the fall of the Communist Block, the China’s entering WTO, the “limitless” possibilities for outsourcing and moving production elsewhere to become more powerful than many governments. The employment has been becoming scarcer than ever, while the transnationals could not anymore expand with the required speed in the US, and could not employ near enough in the rest of the world. The productivity has been skyrocketing with the improving high-technologies in manufacturing, the Internet and the most important with the open global marketplace. Transnationals were well adapted to the shady business allowance of this new globalizing world, they had access to cheap capital through public financing, hefty tax-breaks, corrupted governments in the developing countries, widespread poverty, cheap labor while some countries were running so high unemployment that a labor market did not exist, in a way. When denationalization came, after the fall of the Communism, properties in energy, banking, industrial production, real estate, and e.g. were appropriated for a penny on the dollar….!

One thing, however, did not happen: the consumption almost elsewhere in the underdeveloped world could not near keep enough with the industrial capacity succeeded in the process, even worse, the middle class in the US and Europe could not keep either; high deficits were followed by national debt, because fiscal reserves could not support rising cost to maintain infrastructure, retirement, education, e.g. of an industrial production gradual declining, whereas industrial production was in the foundations of the Capitalism’s economics: economic growth, employment, middle class, infrastructure, social expenses, education, and e.g. all relied on the industrial production to replenish the diminishing fiscal reserves, and it could not happen, then how the trckle down Capitalism overall has become ineffective, indeed.

 

The cyclical self-adjusting Capitalism in the last 2007-09 Great Recession and the rebound that followed up could not perform without governmental interventions: quantitative easing, stimulus packages, tax breaks, e.g. thus, the governments were taking over the market forces.

 

In this new environment the role of the small and medium businesses and investors has risen as a main market agent (market equals economic) for wealth distribution and redistribution, because the only alternative of it was a governmental take over and market socialization, which historically has shown inept.

 

Hence, the market competition should be enhanced to accommodate these new realities and thus become fairer for the small and medium businesses and investors, where as the shady business with lack of business laws and regulations on its first side seems to make their business easier, on a second side such practices bring insecurity to the marketplace followed by high lending rates. Weak contracts and long term collection makes small and medium businesses and investors more disadvantaged than benefited from. Limited liability corporate laws have similar than the weak contract laws effect over them, whereas such laws are in the best usage of the transnationals, who hire multiple lawyers to defend themselves in long costly court procedures, and in many cases limited liability has been waved by judges against small and medium businesses and investors anyway.

 

An more secure market as mentioned above would allow low interest lending, and such is paramount to make market competition fairer.

2012, Joshua Konoiv

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How the Globalization prompts a change of Philosophical Priorities: from Social Order to Market Order


In the politicized past, the philosophical accent of the social structures (countries) was on the division in nationality, race, and part of the world one belongs to. Governments and most social organizations have promoted these ideas, thus diluting the effects from general insufficient wealth that was resulted from low productivity and lack of opportunities of ages of exploitation. Some countries/markets like the United States were greatly advanced to others by vest land and better opportunities based on a pro free business and personal freedom, countries like Germany and Japan, which established highly nationalistic societies, well organized and highly motivated, like United Kingdom and France being very much similar. Many others, small and large countries tried following the patterns of the frontrunners with differing success. Great wars and the Cold war gave the economies runoffs and were preventive valves for accumulated by their peoples pressure of economic injustice particularly edgy in time of recessions, war destruction, e.g.

A market i.d. economy is the agent that carryon development, therefore progress of those could be well accounted by the market indicators. In the past even the word “market” was used to comprehend “exchange of supply and demand”, and many developed countries were considered market economies, in reality, as a matter of fact, very large percentage of anyone country economic activity was subjectively related to political decision or their social structures. In the progress of globalization, however, the role of market demand-to-supply (the change of supply-to-demand is not accidental) gradually was taking over, making political decision less influential over these of the market forces. It could be said the “Social Order” should change into a “Market Order”, in which the market forces would have much more given power to model countries i.d. markets, thus the philosophical conception of nationalism, racism, e.g. should change, too, into some new principles that contribute to pure market competition. Also, the underdevelopment and lack of opportunities from the past, which were contemporaneous of low productivity and lack of opportunities should be gone, too, into an age of globalization, high technologies, and ever rising productivities. The markets limits are beyond limits, if right market agents and approaches are used in this brand new world.

However, the Capitalism targets only productivity as an economic agent: it is founded on industrial production, shady business, expenses based accounting, anti-social expenses policies, high landing rates, pro large business and investors, e.g., which economic agents could had worked fine under the “Social Order” pro supply low-productivity economic conditions, but greatly underperform under the new “Market Order” pro-demand high-productivity market conditions that require more diverse than only productivity market agents: such as strict business laws, contract and insurance regulations, unlimited liability corporate laws (for the decision making corporate management, not for the passive investors), accrual accounting to use social expenses equity for balancing markets, lower lending rates based on higher-security, small and medium businesses and investors empowerment, e.g.

Hence, a change of priorities is needed to explore and exploit the opportunities of the global marketplace, thus instead of the currently managed marginal economic growth a longer term market development is succeeded.

The cyclical runoffs of the Capitalism are pretty much gone, too; the violent fluctuations of the last 2007-09 Recession and the slow rebounding follow-up showed clearly the inconsistence of this theory, in reality the fluctuations have been to deep and not self-adjusting that monetary and other prompt actions were required for any corrections. The Market development could be only comprehended as a Quantum Factor economics, in which the fluctuations could not be self-adjusting, but market agents and tools should be used as parameters to limit these fluctuations that actually has been used by the US and other governments by their QE, stimulus measures, and e.g. http://mpra.ub.uni-muenchen.de/34588/

The practical system of market economics, among other things, differs from currently used trickle-down system of Capitalism by its usage of market agents and tools on the principle “as it comes, as it goes”.

2012, Joshua Konov

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