Scottish Soldier: Comic-Tones

 

Tittle: Scottish Soldier. One of my current experiments of using CLIP STUDIO PAINT PRO. The comic-style with tones is tested at this time.

Market talks!

 

This is the FX chart today based on USD/EUR during these 5 days. It shows how market react to the outcome of the current significant events such as the outcome of the US election. Market is like an unimaginably complex computer which spontaneously calculates how demand and supply shift by means of needs and wants. Nowadays, not only banks and investors but also manufacturing companies of both major and small-medium sized participate in FX trades for financing their business. Therefore, market movements are really honest to instantly reflect the opinion of majority of economic agents reacting to the ongoing events and some events' aftermaths. It is completely up to your freedom of choice for what you think any way.

Transit from Dec. 2020 to Jan. 2021, The dramatic change in Finance, Politics, and Technology will start taking place.

 * This analysis is based on an astrology so please kindly note that these following assumptions are not quite scientific and objective, and the variance of the error is significantly big.  Thanks for your attention.

The inner cycle denotes the transitory chart of December, 2020 and the outer cycle denotes the transitory chart of January 2021. 

The notoriously critical triple conjunction of Jupiter, Saturn, and Pluto has continued from the beginning of 2020 to now, and will continue until 2021 comes.  Saturn temporarily left this conjunction in June, 2020, but came back there. In addition, when Saturn returned to the triple conjunction in the ascendant of Capricorn, Mars started crossing the ascendant of Aries, his own sign, and formed the square with that heavy triple conjunction.  

This means that, the critical world socio-structural change started taking place in the beginning of 2020, and the aftermath effect has been perpetuated after both Saturn's return and Mars' own sign with their square.  This seems to imply that the effect of ongoing wars against Corona-virus (COVID-19) and the fatal world socio-structural crises are being perpetuated together while this conjunction.

At the same time, Jupiter and Neptune (Together represents the financial well-being) has been forming a reasonably soft form, sextile, while this ultra hard aspect.  This may indicate that the quantitative easing (QE) by various central banks in this world have propped up the other capital market such as the stock market. 

 

On the other hand, both Jupiter and Saturn are passing away from the conjunction with Pluto crossing the ascendant of Capricorn meanwhile Mars is also finish crossing the ascendant of Aries.  Then, Jupiter and Saturn start crossing the ascendant of the first degree of Aquarius together.  At the same time, Mars starts forming a conjunction with Uranus crossing the ascendant of Taurus.  

 Remember that Taurus (Wealth and Stability) is a detrimental sign for Uranus (Innovation and Spontaneity).   He forms a symbol of strife, Mars, and then form a square with Jupiter (Expansion and Wealth) and Saturn (Responsibility and Order&Stability), both of which represent a socio-structure.  Even though these two structural symbols are overcoming from the conjunction with a symbol of fatality, Pluto, it looks like approaching a sudden drastic change in the world. 

However, although the sextile of Jupiter and Neptune is cancelled off after this December, it does not mean to induce a hard aspect of them just after then.  The end of the QE does not necessarily induce the hard situation.  It may be hard for some such as those who cling to taking advantage of the status quo. (Jupiter and Saturn together just go away from the ascendant of Capricorn)  We will need to find a new innovative and relatively riskier way not relying on static authority and norm. (Jupiter and Saturn start crossing the ascendant of Aquarius together while forming a square with the conjunction of Mars and Uranus which is crossing the ascendant of his detrimental sign Taurus)

Perhaps, we will see some sort of a solid answer or a solution for tackling against COVID-19 in the beginning of 2021 although some negative side effect remaining in the world.  At the same time, the central banks will stop pouring their excess money supply into the world financial market, and the sharp economic downturn, which has been postponed by the QE programme, will suddenly emerge.  The suddenness and sharpness are represented by the sudden change in the chart pattern just within one month as shown above.  

 

The chart formation from January, 2021 also seems to introduce the prelude of the new era of Pluto starting to cross the ascendant of Aquarius after passing away from the ascendant of Capricorn because both the socio-structural symbols Jupiter and Saturn are simultaneously crossing the ascendant of Aquarius after passing away of Capricorn.  

While Pluto is crossing the ascendant of Capricorn, the vertical relationship of human-beings such as the existence of nations and enterprises is fatally challenged.  By contrast, while Pluto is crossing the ascendant of Aquarius, the horizontal relationship of human-beings such as the form of the relationship with the others and the entire society itself is fatally challenged.  

Furthermore, this drastic transition is also about the shift from earth (subjective feminine) to wind (objective masculine).  The emotional whim by populism and patriotist sentiment have been dominant recently whilst the more dry pragmatic sense will start replace it at a very fast pace in coming years.  The recent development of information technologies and artificial intelligence will be accelerated furthermore, and dry rational pragmatism will frequently override emotionality and caring-sentiment.  We must be prepared for everything as fast as possible because this transformation of the world is rapid as well as dramatic...!

Happiness related to Monarchy, One Party, and Democracy

Published on 12/07/2012 12:57 British Summer Time



Jeremy Bentham created an algebraic formula demonstrating the sum of utility derived from how national political system is structured. The algebraic formula is as follows:

Increasing the weight on one branch of these three decreases the weight on the other two branches. Bentham argued that the current (Contemporary) British system balances the weights among these three branches at the feasible level to maximise the utility.

Nonetheless, Bentham also insisted on abolition of sovereign = monarchy or dictator when his/her existence starts reducing the sum of utility rather than increasing it, and then the revolution shall be emerged. The coefficients of these variable, their sign (+/-), and their significance vary across different time, place (culture and civilisation), and occasion (GDP growth, etc).



At the contemporary time period when Bentham was alive, there was little objective ways to measure the sum of individuals' happiness in each nation in the world. By contrast, due to the development of the information technology, we have become able to collect some peer assessed numerical indices of various social scientific data sets. This happiness index is also collected by objective view points and survey methods under an academic peer assessment. Thus, it is interesting to assess Benthamite calculus owing to this world happiness index.

The data showing how the political system is structured in each nation in the world is quoted from "The Independent Map of the world in 2005". The binary variables are used as the indices to show how one nation's politics is structured e.g. Absolute Monarchy, One Party system, or Indirect/Direct Democracy. There is only one change from the original Benthamite algebra, which is that Aristocracy implies the executive member of a national legislature. As Bentham mentioned Aristocrats were those who have wisdom to govern, so it is equivalent to the government and bureaucratic elites. (He mentioned the House of Lord whose member is not elected from citizens. So, as the members of the legislature is directly appointed by an authoritarian legislation not by individual citizens) Then, many countries governed by one party technocratic policy is seen to be a pure aristocratic system. Absolute monarchy is assumed not to have any influential technocratic institution i.e. aristocracy. (Saudi Arabia and Morocco) whereas the constitutional monarchist nations have an influential parliament (E.g. Arab Emirates). All indirect democratic countries hold both Aristocracy = Technocratic Legislature and Democracy. They are still democratic but not the pure direct democracy. Only the nation seen to be a pure direct democratic is Switzerland in this analysis. Thus, the binary variable representing Monarchy is zero, the binary variable representing Aristocracy is 1, and the binary variable representing Democracy is 1.


**************** An important note ****************

The binary variables are usually 0 or 1, but there are some exceptions.

-> All the British Commonwealth nations have the binary variable denoting "Monarchy" that is 0.3 instead of either 0 or 1. These nations technically have a monarchy but s/he is not their own monarchy living in their countries, and his/her influence is not that strong as much as those nations having their own monarchy like Britain and Japan.

-> The "transient" democratic nations have the binary variable denoting "Democracy" that is 0.5 instead of either 0 or 1. It is still democratic but not a stable democracy. So, the effect of the variable "Democracy" is considered to be marginal.

**************** ***************** ****************

In addition, the Happy Planet Index (HPI) used as the dependent variable in this regression analysis is highly affected by the "natural climate" in these nations. Some nations in a certain latitude mark a significantly higher HPI than the others. Therefore, the absolute value of nation's latitude and its squared value, as the exogenous explanatory variables, are regressed on the HPI as same as the previously mentioned binary variables. The reason why the binomial function of Latitude, instead of a single variable (The linear function), is to demonstrate the parabolic function. The linear model (Regressing only on |Latitude|) only express either the right middle of equator or the North pole and the South pole are the happiest place to live. But, the HPI certainly shows that the optimum latitude to maximise the happiness is somewhere not far away from equator but not the zero latitude point.

All in all, the formula for the regression analysis is as follows:

*** The dependent variable is the natural log of the Happiness Planet Index (HPI) ***

The binomial function showing the climate effect (Latitude) is "the absolute value of Latitude + The squared value of Latitude".

In addition, there are the three binary variables. There are three binary variables showing the pure effect. The first one describes the pure effect of Monarchy. The second one describes the pure effect of Aristocracy. Then, the third one describes the pure effect of democracy.

The rest of variables are the binary variable denoting the interactive effect by two or three variables together. The interaction effect by "Monarchy" and "Democracy" is not assessed because there is no country having both monarchy and democracy without an aristocracy=technocratic executive branch.



The coefficients and their significance is as follows:

The coefficients of the variables showing the climate effect are 0.02256 for the coefficient of the absolute value of Latitude and -0.0004 for the squared variable of the latitude. Then, the formula shapes an upward parabola shown in the picture below.

Therefore, the place where the latitude is either +31 or -31 maximises the happiness of people living.



All the three binary variables denoting the single effect have a significant and positive coefficient. Both the interaction of Monarchy and Aristocracy and the interaction of Aristocracy and Democracy have a significant and negative coefficient. The coefficient of the interaction of all three variables is non-significant, so that the half of the coefficient value is used. The HPI derived from each different political structure is as follows:

This is a bar graph showing the policy effect on the H.P.I.:

These trends can be roughly visualised in a picture graph like this:

A nation with the direct democracy (Monarchy = 0, Aristocracy = 0, Democracy = 1 ) produces the highest HIP. But, Switzerland is the only nation with such a system in the world. So, it is not sure if it is still significant number of the sample to prove its superiority.

The absolute monarchist nations, (Monarchy = 1, Aristocracy = 0, Democracy = 0 ) is the second best. But, there are only Saudi Arabia and Morocco as the examples. Furthermore, all the other monarchist nations without any democratic structure (Monarchy = 1, Aristocracy = 1, Democracy = 0 ) showed the lowest HPI. Thus, it can be seen that, in general, monarchism without any degree of democracy is more likely to cause unhappiness rather than happiness.

The nations with one party system mark the second lowest HPI. Even though these nations are more efficient to be stablised than those lowest developed nations, the transient democratic nations, and any non-democratic monarchist nations. Nonetheless, they seem to sacrifice happiness for their stability.


Some of the constitutional monarchist nations with democracy seem to be happier than democratic republic nations. But, majority of the constitutional monarchist nations are less happier than democratic republic nations.

The democratic republic nations, though their democracy is indirect, such as the United States of America and France are the happiest nations next to Switzerland, the direct democratic nation.



All in all, Democratic Republican nations at the latitude of 31 or -31 seem to be the happiest ones. It also looks like that we can try to establish another Direct Democratic country because it looks like maxminising the happiness of individuals in a nation. Nonetheless, only the sample is Switzerland and it is never known if the similar model is applicable to increase the happiness in another country in reality. The democratic republic nations perform well among all. The performance of the constitutional monarchist nations with an indirect democracy varies.

Hence, this econometric analysis seems to be able to assist Jeremy Bentham having argued that, if monarchy start causing disutility rather than utility, then it is time for revolution! Perhaps, we have never known that there will be a revolution for the cause of Direct Democracy, the unknown ideal, in the near future? The Direct Democracy seems to maximise individuals' happiness at the optimum level (Though there is not enough number of the sample to prove in reality) by means of this statistic inference.



* It was difficult to find if the model creates heteroscedasticity: Some tests said no, but the other said yes. But, this analysis was mainly composed of the binary variables, and the dependent variable used in this analysis is not a precisely scientifically accurate variable. So, the aim of test should not be strict as much as the other econometric analyses.

Minimum wage is necessary to maintain free market economy (Monopsony)

When someone claims for imposing minimum wage, many may still tend to call this person a socialist. However, imposing minimum wage seems to be less socialistic than allowing politicised trade unions (labour unions) to hold their wage bargaining power. In order to preserve capitalist model based on free market market economy requires the reasonable level of regulation in order to sustain the fair rule of market competition, stable risk management of investment (attracting investment), symmetric information (mitigating information bias), and motivation of both employers and employees participating economy without being feared of mismatch (Rationally forming their contact with each other). Minimum wage can be considered as a form of regulation, and it provides a reason to say there is no need for a trade union intervening for avoiding exploitation of labourers.

Nowadays, involuntary unemployment and stagnating aggregate demand are still the significant socioeconomic problem. The root cause of the current economic structure seems to be the shrinking market competition due to growing power of major corporations. Unlike the earlier stage of capitalism, the current capitalistic model is more centralised and specialised in the hand of minority elite corporate executives and public bureaucrats working for the favour of these corporate elites. The market has become less competitive and less free due to this phenomenon, and the market is becoming less liquid than it used to be. Under this circumstance, it reduces the liberal wage/income bargaining of majority individuals owing to this asymmetric power balance.

In the free competitive market, the demand and the supply are more likely to meet at the equilibrium point, and the error from this equilibrium point is corrected by converging the price and the quantity to the equilibrium point. By contrast, due to the asymmetric balance of power mentioned in the aforementioned paragraphs, it is now diverging from the equilibrium point as the market becomes less competitive and the freedom of entering market is suppressed.




This graph shows how monopsony (Buyer holds power over seller). The labour market of the current capitalist economy is in this situation where the labourers (Selling their labour in the market) hold less power over their wage bargaining power whilst the employers (Buying the labour resource in the market) hold excess power.

The demand for labour can be also described as the average revenue from employing labour, and the average labour supply can be the average cost for employers for employing labour. The equilibrium point (Demand meets supply) is where the average revenue becomes equal to the average cost in the labour market. Then, the wage is set at both employers and employees (labourers) agree at the market competitive level, and the labour is employed where involuntary unemployment is reduced.

On the other hand, the most desirable point for the employer is not the equilibrium point because it does not maximise their profit for their business. Their desiring point is the level of the labour employed where the marginal revenue of hiring labour meets the marginal cost of hiring labour. At this point, employers use their influential power over the market to set the wage (their cost) lower than the equilibrium point so that they can maximise their profit. Only the labourers who are still willing to participate by using their labour in the market can be employed.

This situation pretty much explains why some labourers work way too long hours with unsatisfactory wage whereas there are many citizens unhappy to be employed. These unemployed citizens tend to be blamed for not willing to keep applying for a job. But, this is fault of not only them but also the market situation not able to afford the wage motivating them to work. In addition, already employed citizens suffer from the income shortage for propping up their cultural standard of living and for compensating their exhaustion from working.

The depreciated wage level caused by monopsony in the labour market induces the stagnation of the aggregate demand which represses the market multiplier, and this leads to the economic downturn. The aggregate supply level also eventually falls because the revenue from providing the supply declines due to the falling demand. Therefore, this monopsony has to be discouraged not only for majority citizens being employed in the labour market but also the capitalist citizens employing labourers. Some of these capitalist citizens will also start suffering from declining their activities.




Imposing minimum wage may overcome this situation of monopsony by raising the wage standard to the market equilibrium point. This will reduce the involuntary unemployment as well as stimulate the market multiplier. Reduced involuntary unemployment reduces the cost for public spending. It also increases the income of already employed citizens and reduces their frustration, and then this reduces the risk of suffering from mental disease so this also reduces the public spending cost. It will increase the aggregate demand induced by increasing the income level of majority citizens.

The typical counter-argument against minimum wage is that it sets the wage higher than the equilibrium point so it decreases the labour demand. However, the fundamental problem of the current situation is that wage is set at the considerably low enough to increase unemployment and repress the market multiplier.

At the same time, employers cannot be blamed for this situation because of the following reason. The current market economy is based on the specialisation in the global level and it requires the huge economic scale of production, and the model based on the competition among traditional small-medium sized enterprises is already an old fashioned way not able to survive in this current economic model. Therefore, it is inevitable that more selected numbers of corporations with stable fiscal situation and abundant experience, productivity, and net working survive to thrive whereas traditional small-medium sized firms suffer from their staggering business performance.

Instead of cracking down against these major corporations to revive the good old competitive market based on traditional small-medium sized firms, simply imposing the minimum wage is easier and more productive. The government intervention of reducing the power of major corporations will be costly, and will slow down the economy by sacrificing all the wisdom and virtues of major corporations. Therefore, it would be better to allow the current capitalist economic model to grow while reforming it for some optimisation.

This policy will improve the corporate structure of already existing firms. Successful corporations with good managements have enough revenue to cover the cost for minimum wage as long as it is set at the market equilibrium balancing the happiness of employers and labourers. This is also an effective tool to expel ethically misbehaving corporations which usually suffer from bad management with unstable fiscal situation. Then, unnecessary exploitation will be prevented.

This policy will also encourage work sharing among citizens. In the current economy, there are citizens working for excessively long hours. When this policy is implemented, works will be shared among more individuals, and their work and life balance will be optimised. Furthermore, it will encourage to replace some tasks relying on cheap labour with newly invented technologies such as automation by artificial intelligence (AI). There are still many firms hesitate to introduce the new technology optimising their business performances because clinging to relying on their cheap labour is still economical in the short run. All in all, this will be an opportunity to accelerate the innovation.


Having considered about monopsony in labour market, imposing reasonably high minimum wage bring aforementioned benefits. It is still questionable whether it can be ideally adjusted to the equilibrium point or it exceeds more than the equilibrium point. Nevertheless, this policy still seems to be worth off to try to implement in order to tackle with reducing involuntary unemployment and stimulating the market multiplier with relatively lower cost than the other government intervention.

The Political Compass by Country measured by Numerical Data

Published on 08/06/2019



The Political Compass inevitably relies on the author's subjective sense of judgement to measure where politicians/countries are located on each spectrum. Its author still uses the objective analysis to the certain extent as he seems to be an educated and well-informed academic. There are also various many derivational charts of political compasses invented by various individuals. However, majority seem to rely on the subjective measurement to determine how the selected policies are categorised in their chart.

This project is inspired by the Political Compass, and attempts to create a chart based on less relying on an author's subjective sense of judgement. So, the numerical data set is used to create this chart. The data were downloaded from the following sites:

Data Source:
Economic Freedom: https://www.heritage.org/index/download (2019)
Political Freedom: https://freedomhouse.org/report-types/freedom-world (2018)

By following the Political Compass, the X variable (The horizontal axis) indicates the economic freedom i.e. friendliness to free market capitalism. The way the economic freedom is measured turns to be notably different from the perspective of the Political Compass because the Heritage.org regards of the economic freedom and the development of the global capitalism as the positive optimistic element meanwhile the Political compass regards of them as relatively more oppressive and something not favoured by the mass. Yet, the main objective is to measure how each country adapts the free market global capitalism on the horizontal axis so that this does not induce it to be a significantly different analysis.

As same as the Political Compass, this chart also indicates the top side of the chart denotes more authoritarian, i.e. less politically free, and the bottom side denotes more liberal, i.e. more politically free. So, the Y variable (The vertical axis) is created by diverging the political freedom index. This is also not quit identical as what the Political Compass attempts to indicates. This index from FreedomHouse.org only ranks the countries' policies only by means of the relative measurement to the other countries in the current world situation: It compares them with neither historical examples nor the non-existent but maybe possible policies introduced in political theories.

Each variable is calculated as follows:


Both indices are powered by 0.3 in order to balance the chart (Making the candidates on the chart comparable and the chart more visible). 0.3 is used for the power because the average and the median of the variables become close to 0.5 together and the gap between the minimum and the maximum is widened by this calculus.


This chart was created by Microsoft Excel but it is not equipped with the chart label shown on the map of the chart. So, a chart-labelor was installed from www.appspro.com/Utilities/ChartLabeler.htm.

The dots of these countries are shaped and coloured dissimilarly by means of various diverse geographic and cultural regions. Unlike the original categorisation for the referred data sources, this chart scattered the original regional categories into more detailed unique ones. Western English speaking countries are categorised as Anglo-Saxon and Celtic on this chart (Blue Dia). Those in Asia-Pacific which are heavily influenced by Confucianism (Red Circle) are distinguished from the rest Asia-Pacific (Purple Circle). Those in Europe are roughly divided into three groups, West (Yellow Dia), Central (Pale Green Dia), and East (Pink Dia) in order to clarify the difference caused by historical and ethnic characteristics and the past as well as the present political factors. (It is by means of this author's subjective sense based on his knowledge because it is difficult to clear cut with a pure objective measurement)

This may help to compare and understand the economic and political attribute of various countries in a macro perspective.



.

.
.
.
.
.
.
.

The IS-LM Model is wrong!

This was originally posted on Wednesday, October 22, 2014

* Preface *

Many students of economics may have studied about the IS-LM model, and then tackled with various homework assignments requiring to solve the excessively complex formulas and understand the theoretical reasoning behind them. These macroeconomic teachers always expect students to consume their precious time and energy to solve a ton of equations and memorise the theory to explain what these algebras denote. The mathematical formulas applied to this model are mostly linear and straightforwardly simple but all equations are interconnected to all the others. As long as they are familiar with economics in general, it should not be a big problem to understand the theoretical bases. But, these teachers require these students to interlink all the necessary theories which textbooks show to all equations. In addition, when the interpretation of these students differ from what the textbooks and the teachers expect, their mark tends to be lowered. Therefore, studying the IS-LM model is very exhausting.

Nevertheless, despite their efforts and well-understanding, there is a big scepticism about the IS-LM model. There are still many debates about whether or not this model successfully explain the real world economy. Of course, there is always a residual gap between what the prediction model estimates and what the real world phenomenon is in real. This is why the IS-LM model is a problem because of its complex tangle of a bunch of the equations. Especially in social science, when many mathematical equations are used and interlinked together, the total sum of the residuals tends to be significantly magnified, and the bias and the inconsistency of the model also tend to take place much often. Furthermore, these estimate mathematical models are not statistically tested as their formulas are merely based on the literature of economic theories. Therefore, it is really a natural fact that the IS-LM model often fails to fit into what really happens in real.

Even in the pure literature based economic theories and the logical economic theories also counter to the IS-LM model. This report introduces some significant counter-arguments against the IS-LM model as follows.


1. The Ricardian Equivalence


This theory implies that providing economic agents with extra income by the stimulus package does not successfully induce them to spend enough to stimulate their economy. When they prefer consuming/invest less and saving more at the present time to the extra consumption&investment, the extra income available by the tax cut and/or the government expenditure rather causes the negative impact on economy than the positive impact. The cost incurred by the tax cut and/or the government expenditure at the present time period has to be paid back in the future. As the economic stimulus becomes unsuccessful due to their preference of spending less than expected, the tax revenue in the future time period is lowered meanwhile the cost remains.

Those who disagree with the Ricardian Equilibrium argue that there are many economic agents with the low income insufficient to satisfy their needs and wants during the recessionary period so that they happily spend their extra income provided by the stimulus package to stimulate economy.

However, their extra income spent for consumption/investment is eventually transferred to owners of the means of production who produce the consumptions and own the assets invested. These owners will rather want to shift their income earnt from their capital investment to their assets in this downward market to either saving in their bank account or investing more active foreign markets.

When an economy become at the point that even these owners of the means of production become deprived enough to cling to the extra income provided by the stimulus package, the national government is less likely to be able to issue their bonds to incur the debt as the bond credibility is substantially lowered.


2. Liquidity Trap


The stimulus package by the monetary policy channel still does not work due to the liquidity trap. As mentioned in the Ricardian Equivalence, economic agents tend to be reluctant to spend their extra income available during the recession. Even the monetary policy is less likely to incur the cost like the previously mentioned fiscal policy channel, the result is identical to the previously mentioned scenario.

This phenomenon is explained as the liquidity trap. As shown in the graph above, although the extra money supply becomes available to transform to the extra income available for economic agents to spend, the effect is substantially low or even nothing under a very low liquidity level i.e. the investment motive is very low. The little effect on the interest rate reveals little impact of the money supply increase on economy. This means that the factors determining the interest rate such as the price indices, the business activity rate, and the value of this money currency in the foreign currency exchange market hardly changed by this monetary policy.

On the other hand, this interest rate shown in this LM graph merely implies the central bank interest rate, and this only partially affect on the banks' interest rate setting for their borrowers. The rest of this report explains the effect on these interest rates. The IS-LM model neglects explaining the following factors because the IS-LM model assumes all these factors are positively correlated to what it indicates in the model. Nonetheless, the more real economy is obviously different from this false assumption.


3. Under the Banking Monopoly in case of Risk Neutral


The supporters of the IS-LM model assume that their margin rate tends to be always positively correlated to the central bank interest rate so that the final interest rate for both investment and saving is always controlled by the central bank interest rate affected by the fiscal and monetary policy.

The IS-LM model is based on the assumption that all or majority of private banks and the other financial institutes are under the perfectly competitive market. By contrast, the real world economic situation is even not close to this assumption and actually far away from it. They are in the less competitive market due to the nature of the financial industry and market.

The interest rate is the price of money rent and borrowed. So, the private banks and the other financial institutes need to add the extra rate on the central bank interest rate after borrowing from the central bank to rend their money to their customers in order to compensate for the renders' service cost and reward.

Also, in a market economy, the characteristics and the quality of the financial service is heterogeneous to each other, and the demand is severely affected by their geographical situations e.g. access to customers and clients (both quantitative and qualitative), cultural attitudes toward finance, and the infrastructure for obtaining information and technology available there.

On the top of the service quality issue, the service users are difficult to change their service providers often as much as the mainstream economists assume due to the contract binding them together and the transaction cost to close and open their bank accounts. So, these service users are more likely to be bound to their already contracted financial services.

All in all, the market nature is far more monopolistic owing to these aspects. Then, the interest rates are set at the quantity of money invested where the marginal revenue becomes equal to the cost which is the interest payment for savers for this case. So, the quantity invested is lower than the quantity at the investment and saving intersection, and the interest rate charge for borrowing is always significantly way higher than the interest rate payment for savers.

The interest rate payment for savers may be affected by rise of the central bank interest rate increase but not often by fall of the central bank interest rate unless the market is very competitive. These financial service providers take advantage of this situation so that the interest rate payment for savers often tend to be notably lower than the interest rate charge to borrowers.

The following charts explain the different situations to set the final interest rates.

3.1. When the Central Bank Interest Rate is high


When the central bank interest rate is high, then the interest rate paid to savers is adjusted to be equal to the central bank interest rate.

The quantity of money invested is adjusted to the point where the marginal revenue from the return from investment intersects with the central bank interest rate, and then the interest rate charged for investment becomes higher as the central bank interest rate becomes higher.


3.2. When the Central Bank Interest Rate is low


When the central bank interest rate is low enough to be able to split from the investors' profit margin, then no change of both interest rates tends to take place as shown in the graph above.

This aspect completely contradicts what the IS-LM model assumes. As the market is less competitive, the monopoly power is stronger enough to maintain their high interest charge for investment payment unchanged.


3.3. The extreme case: The Central Bank Interest Rate is either zero or minus



In this extreme case which seems to occur frequently under the world economic crisis period nowadays, many central banks of this world have set their interest rate notably close to zero. Even some claim that they should set the rate zero.

Nonetheless, as shown in the previously mentioned mechanisms, the previously mentioned interest rate setting under the low liquidity, the money supply offered by the central bank with a sizably low interest rate hardly stimulates economy.

The interest payment for savers cannot be set below zero because they will no longer save in these banks or any other financial institutes setting such a negative interest rate.


4. Risk Taking Patterns

On the top of the gap between the interest rates, the IS-LM model over-simplifies the investment pattern influenced by the psychological characteristics of banks, investors, and other financial administrators.

What should be concerned is that the interest rate setting based on the investment volume is not always counter-cyclical to the business cycle, and not all economic agents are risk neutral as many mainstream macro-economists tend to assume.

The following examples are based on the situation of the fiscal and monetary policy is tightened to repress the economic boom or the recession repressing the aggregate income level.

The Y_t denotes the aggregate income invested to economy by these investors, and X_t denotes the investment safety (A higher value indicates the lower investment risk).


4.1 Risk Neutral: The IS-LM Curve assumes all agents are as such


This is the way which the risk neutral agents regularly react to the business cycle downturn causing the aggregate income shrinking.

They simply reduce the investment volume, and passively react to the investment risk change.

The IS-LM model may work as long as all the economic agents act as such.


4.2. Risk Averse


The risk averse economic agents put priority on their investment safety to their nominal income gain from their investment volume.

When their investment opportunity becomes more limited, they tend to take this situation warning of losing their business opportunity and potential collapse of their investing clients.

Even in the case where the fiscal and monetary policy represses the booming economy, they imagine about the negative side effect of the over-expansion which the policy alerts, and then they prefer preparing for the worst case scenario.

In particular during the recession, more agents tend to become the risk averse because their perspective tends to be more pessimistic about the future.

All in all, the income downturn exaggerates the investment discouragement furthermore.


4.3. Risk Lover


What the mainstream macro-economists supporting the IS-LM model ignores is this psychological characteristics of economic agents the risk loving attitude toward investment.

When the macroeconomic level of the aggregate income goes down during either the policy tightening or the recession, these risk loving investors start investing more in order to compensate for their loss by the downturn. Even though their action notably increases, they tend to be willing to invest a lot for increase the nominal investment return furthermore.

Their prior objective is to maximise the gross income growth despite the high risk reducing the average expected investment return. So, they will either maintain the current investment volume or even increase the volume in spite both the investment risk, the high central bank interest rate, and the high tax and/or the less government expenditure.

In particular during the economic bubble, an euphoria severely affects people's mind enough to lose their rationality. So, they often tend to become the risk lovers while the economic bubble.



5. Risk Premium in case of the Perfect Competition

Even in the Perfect Competition Model fails in the real investment mechanism because it ignores the interest rate influenced by the risk premium of investment. When renders invest, they add the extra interest rate charge on the top of the risk free interest rate which the mainstream economists supporting the IS-LM model use in the macroeconomic model.

The graph indicates the interest rate setting of a bank under the monopoly:

Under the monopoly or a less competitive market, these firms simply takes the cost incurred by the investment risk by spiriting the expense from their profit.

By contrast, in the perfect competition, it is very complicated to explain with only the saving=investment curves so that the graph will be a overly complicated mess if it attempts to explain the risk premium rate setting under the perfect competition.

So, this analysis introduces the cost denoted as C, which indicates the cost of attracting savers, the interest payment to the central bank, and then the risk premium all together.

The graph below sets the saving motive and the central bank interest rate as rigid so that takes account of only the investment motive and the risk premium.


In this case, the interest rate is not guaranteed to be counter-cyclical to the business cycle, and it can be acyclical or even possibly pro-cyclical to the business cycle.

Some economists argue that the risk premium factor may affect the investment cost more than the other factors such as the central bank interest rate, the saving ratio, and the aggregate income/productivity level.

So, the final interest rate influencing the investment volume may rather rise during the recession because the risk premium rises meanwhile the rate may fall due to the lower risk premium during the stable or booming period.

The regime of the United States of America and Capitalism based on Protestant Individualism may continue until the second half of 21st century

* This analysis is based on an astrology so please kindly note that these following assumptions are not quite scientific and objective, and the variance of the error is significantly big.  Thanks for your attention.

There are many sceptics about the regime of capitalism whose foundation was strongly influenced by Protestant-Christian individualism (Especially by Puritans). Furthermore, these sceptics also condemn the United States of America (USA), the nation build by majority Puritans and their ethics (and more likely the United Kingdom of Great Britain and Northern Ireland (UK) where Puritanism was born together). They have claimed for, or at least wished for, the collapse of the USA, the leading hegemonic nation of Capitalism nowadays.

On the other hand, the USA and her satellite nations (following the identical political and moral principle, Capitalism, and allying with the USA) are still thriving despite various national crises they have faced through their modern history. There are various theories backing up reasoning their survival and prosperity such as geopolitics, political philosophy, abundant natural material and human capital resources, and even a spooky cultic conspiracy theory. 

This essay focuses on Modern-Western Astrological methodology to create an estimation about how long the regime of the USA and Capitalism which are heavily influenced by ethics of a major religious group Puritan / Individualistic Protestant-Christianity.  The reason why it focuses on religion instead of political structural matters is that the existential crisis of Capitalism and its leading organisation will be caused by drastic change in belief of majority human individuals.  

The minority political elites may oppress to force majority individuals to obey their rule; But these elites eventually need to leverage the dominant religious principle to hold their power.  In another word, the world will need to replace a game with another game.  The players believe and follow the rule of this game is the fundamental life reality even though some of these players despise it.  Without changing a game itself, those who know the advantage to win the current game are always more likely to win. 

Pluto crossing the ascendant in Pisces is used for this prediction.  Where Pluto crosses the ascendant of a certain zodiacal sign, it affects the fatality of what this sign represents.  Pluto also represents the complete transformation of something to all or nothing. Pisces represents spirituality, inclusiveness, ambiguity, and shallow but wide understanding of people's mind.  When Pluto crosses the ascendant of Pisces, there will be a fatal incidence whose influence is slow and gradual but a permanent and complete.  The cause of these changes will be really difficult to reason why they happen, so it is an ambiguous cause of the changes in individual-humans' mind and the world hegemony of not only politics (The game player) but also religion (The game rule). 

 

 

The last time when Pluto started crossing the ascendant of Pisces was in the year 1797.  The chart shows 12th May, 1979, the day Napoleon Bonaparte and his army of France conquers Venice.  The influence of Napoleon Bonaparte's campaign has gradually replaced Christian theology with scientific secularism.  Morality became no longer restrained by religious norms and values, and its understanding became being dependent on the positive logical inference of how rational individuals can derive without a moral autocratic intervention. 

Moreover, 1797 was also the year the USA has secured her world political stability.  The USA elected her second president, and established the foundation of US navy.  British navies were defeated several times.  From then onward, the USA has grown her economic and political strength in the world. In addition, individual responsibility of hard-work and self-autonomy started to be developed and become the dominant norm of human individuals in this globe. 

From 1797 onward, the fundamental elements of capitalism, secular morality based on individual responsibility of looking after themselves, scientific understanding of natural world, and virtue of hard working started becoming a common norm shared with majority human individuals in this globe.  

 

This is a chart of the time when Pluto started crossing the ascendant of Pisces previous to the aforementioned time period.  This shows the aspect of 12nd May, 1554, the day Queen Elizabeth I of England was imprisoned in the tower of London.  In the following years, England defeated Spanish empire, formed an union of nations with Scotland and Ireland to form the UK, and then became the world dominant empire.  

Spanish empire with Roman Catholic regime was replaced by British empire (a union of nations in Great Britain, England, Wales, and Scotland, and Ireland) with Protestant religion.  This partial collapse of Catholic church and its patron nations encouraged various types of Protestant churches to emerge and nations following Protestantism to emerge.   

 It was followed by Puritan, one of the Protestant churches, revolution in the UK and France to replace the contemporary monarchist regime with a new Puritan political structure.  After their defeat in England and France, these Puritan moved abroad to form their strong hold; From England to the USA, and from France to Switzerland.  In Scotland and the Netherlands, the significant population of Puritan remained inside.  

Since then, these nations, the USA, Switzerland, Scotland (as a part of the UK), and the Netherlands have become consecutive winners of the game ruled by the world manipulated by the interests by Puritan elites.  These Puritan nations have obtained their initiative step by step, when the UK and Protestantism rose into power in 16th century and when the USA and Puritan (One division of Protestantism) rose into power in 18th century. 

The next year Pluto start passing the ascendant in Pisces is 2044.  This may become the time when the global leading position of the USA and her base political and moral principle Capitalism and its base Puritanism will experience the crisis moment.  Until then, both the USA and Capitalism are predicted to survive to thrive.  Only some minor changes through the timeline may occur until the second half of 21st century.  

The alternative of the game change is always unimaginable. Pisces represents the ambiguity and the border beyond our natural world.  Pluto represents fate and fundamental alternation.  Therefore, the combination of these two kinds of characteristics does not allow us to imagine clearly but it infers something certain and drastic.  

 By means of the history of the planet earth and of the universe, two or three decades will be a extraordinarily small friction of time.  Many of human-individuals living nowadays have a high probability of conceive a new world structure whilst it seems certain that the fundamental game role of this world stays unchanged (maybe through some minor changes) for more than two decades. 

Better Economy, Better Environment! Environmental Protection needs Growing Capitalism!

Brazilian space agency reported the 3,069k㎡ Amazon deforestation in the first half of this year. Not only environmentalist activists but also major firms of international finance are furious at this immense lose. This immense deforestation was caused by the rise of various illegal economic activities due to this year's severe economic downturn. These criminals extract their resources for illegal trades from those places where economic regulations discussed through the discussion of politicians, financial brokers, and various private industries.

The economic regulations are established by means of the equilibrium point of the short term gains and the long term sustainability which majority capitalist politicians and private agents agree with. Nowadays, many of these politicians and private agents are aware of the external costs of their economic activities, and they cannot live without a social tie with the local community. As Aristotle said "Human-beings are naturally social: The one who is not social at all is either a beast or God". None can live without a mutual agreement with the others living in the community.

What those who are from these major international funds are disappointed with the current situation is that they have lost their massive financial benefit from that deforestation. These forestry resource as the commodity which requires to be managed carefully so the price of these commodities are priced carefully enough to mitigate the future loss of our living environment sustainability. In addition, people in the world are now aware of environmental carefulness of private firms extracting this resource so that the excess extraction of resource induces the substantial loss in the stock value, which those funds investing to these private firms incurs an immense financial loss.

Furthermore, this matter is also related to the emission tax trade. The current capitalist economy encourages the emission trade between countries and regions in order to balance the ecological footprints in the world environment. This taxation system attempts to restrict wasting environmental resources by not slowing down the economic development. The current illegal businesses causing the massive deforestation disturb the calculus of balancing the permission for extraction and the prohibition of forestry. The emission tax trade scheme is prepared for rewarding those who are ethically performing the extraction and looking after the sustainability at the same time.

It is permitted to extract a huge amount as long as they are obliged to pay for an equivalent immense tax compensating the loss. However, this obliged tax payment is ignored by these illegal businesses. It is about not only losing the tax revenue but also it derivatively means to penalise those who are ethically performing well. The reward for their ethical performance is relatively devalued against those who unfairly gain the resource by paying no penalty for it. This is why capitalist politicians, fund managers, and private manufacturing firms are furious at these criminals.

At the same time, these criminal have some reason d'etre to operate this illegal business. The root of all evil comes from the current economic downturn caused by COVID-19 pandemic. Because some firms have lost their business due to the temporarily but significant aggregate demand downturn, those who have technologies and labour resources start shifting from legal market to illegal or unethical (or often both) market which demand these production quality. This is why the aggregate demand management is crucial for not only supporting businesses but also preventing the aggregate supply materials switching from the ethical legal market to the unethical illegal counterpart.


On the other hand, the economic growth is important not only for the resource management purpose but also the environmentally friendly technology development. The lack of the aggregate demand decreases the revenue covering the cost for the innovation. When the aggregate demand level is enough, the disposable income is fulfilled enough to spend something a little bit more costly than the regular products so there is an enough opportunity for innovative products to be consumed. By contrast, when the aggregate demand is depreciated, consumers become reluctant to spend something authentic or innovative products whose price is higher than the other even though the price difference is a little bit.

For example, the plastic waste problem is highly emphasised in the global level so that the invention of the substitutes is highly urged. The severe ecological problem of plastic is that plastic is not biodegradable when it is disposed. When plastic is landfilled or sinks into the sea, it remains without being naturally rotten to cease. This is why there is a movement of banning or at least restricting the single use of plastic for disposable products.

Then, paper for various many substitute products is adopted because of paper's biodegradability as well as its processability. Nevertheless, the processability of plastic surpasses paper so that the disposable items made of plastic such as plastic straws used for drinking beverage is still cheaper and more comfortable to use than paper counterparts such as paper straws.

There is a paper product but yet it is difficult to be recognised as being made of paper. This kind of product is based on chemically processing papers. For example, there is a material which was used even before plastic was initially introduced in the world, and this material is manufactured by laminating papers dipped into chemical liquid to solidify its hardness and durability. This example material represents as one of substitute materials of plastic after its various usages were replaced by plastic. This movement is a typical example of "visiting old、learn new".

The fundamental issue of this alternative product made of chemically processed papers is that its unit marginal cost is significantly higher than plastic even with some public subsidies provided for this manufacturing process. This product is critically time consuming for its lamination process in the chemical liquid. Furthermore, the processability of this product is critically lower than plastic despite its higher hardiness than plastic. The sales of this processed material has been relatively higher during economically stable period meanwhile the sales substantially dropped after the business cycle falls into the current downturn due to COVID-19 pandemic.

All in all, sales of the environmentally friendly items is pro-cyclical to the (legal) business cycle and counter-cyclical to the illegal (Which is often unethical) market business cycle . Unlike many anti-capitalist socialist environmental activists rant, capitalism has evolved to take an external factors of economic activities such as emission of pollution and environmental impacts as seen in the aforementioned stories. This is why the aggregate demand stimulus and its management are non-negligible, and environmental protection requires a constant economic growth.

The Greatest Sum of Pleasures with the Lowest Sum of Pains shall be the Principle of Moral and Legislation!

I always wonder why there are some bunch still interested in boring traditional stuff such as Opera and Poetry, and some government subsidy it. I am rather able to understand those who enthusiastically observe their supporting football team matches with their expense. I am interested in neither side meanwhile I would rather like to support latter and abolish subsidy for the former because it offers interests and pleasures for the majority and produces a higher aggregate revenue if I had to chose either of these two sides.

Our function of body and sense generating pleasures and pains is provided by our creator (You may call God). By contrast, morals, policies, and activities whose policy does not explicitly show the trade off between the calculus based on pleasures vs pains should be heavily criticised with an enormous scepticism, and we should possibly avoid or even counter-act against to abolish.

The example which we should be highly sceptical and try to abolish is monarchism and tribunal traditionalism. The political and moral theories of these two usually ignore the aforementioned calculus of pleasures and pains. They enforces individuals to follow their orders and customs merely because they are long-lived tradition people have looked up and monarchy or tribunal chief are the symbol of stability and longevity of civilisation. It is simply a subjective interpretation of the status-quo which indoctrinates the rest majority individuals with superstition.

There used to be a time when the existence of monarchy was in a high demand. At this time, the community network of the majority individuals was so primitive that it was restricted by obstacle of natural landscapes and communication barriers mainly of language. Then, conflicts between various feudal tribes were common, and people sought a powerful charismatic figure binding people together. Under a threat of frequent conflict, there needed to be someone who has an ultimate power of final decision making processes when the outcome of their discussion was unstable without some enforcement unit stabilising it.

Then, as shown in the algebra, initially introduced by Jeremy Bentham's Fragment on Government, individuals used to demand the strength of monarchy stabilising their living environment while sacrificing utility (pleasures minus pain) drained by monarchy monopolising their resources in their living environment.



On the other hand, thanks to the development of international trades and information technology, the strength which monarchy provides with individuals is insignificant for maximising the sun of the utility any more. The global trade based on the free market equilibrium has enabled individuals to mutually agree with each other through the spontaneously derived market equilibrium force without any physical single authority enforcing the decision making process. The information technology development has enabled citizens to rationally accept and understand pluralistic norms and values of various unique individuals living in various different regions and cultures, and to even start to share new norms and values in a shared cybernetwork.

The aristocrats nowadays mean corporate elites and government bureaucrats. The form of this modern aristocracy is now interpreted as meritocracy. There tends to be a gap between those who are able to obtain talents and skills highly demanded for sustaining modern technologies and trade affairs and those who are in the shortage of them. As long as this gap exist, individuals hardly forfeit the utility derived from modern aristocrats' wisdom even though majority individuals have to accept the economic and social inequality caused by this distribution which these modern aristocrats own a higher share of control-ability.

F-14 Tomcat ( US Navy ), Night Scramble! by coloured pencils

F-14 Tomcat ( US Navy ), Night Scramble! by coloured pencils


F-14 is definitely the legendary air-fighter which was designed to shot down enemy airplanes and ballistic missiles from the evil socialist empire!!

F-14 Tomcat is my most memorable one! Not only its specification but also its ultra innovative design with beautiful line are really attractive despite its massive cost for purchase, fuelling, and maintenance.

Mana K by Coloured Pencils 20200510

COVID-19 outbreak challanges Libertarianism, and how Libertarianism responds to

Under this currently ongoing pandemic of Covid-19, the public security is thought highly by the populace, and the value of Classical Liberalism and Libertarian (In this essay, it uses Libertarianism for representing both) tends to be undermined. Many sceptics of Libertarianism tend to assume that Libertarianism recklessly ruins the public services and safety net and discourages the public interests. Therefore, these sceptics of Libertarianism tend to accuse Libertarianism for ruthlessly leaving the victims of the pandemic such as the current COVID-19 (Corona Virus) alone by blaming their self-responsibility of each private individual.

Nevertheless, this is the complete misguided prejudice about Libertarianism! Libertarianism is against an authority expanding to suppress individual liberty under the name of the public security. Even though Libertarianism regards highly of individuals' voluntary actions and free will to not only maximise their utility but also tackle with their own problem with life, it also recognises the limited capacity of each private individual and private enterprises to prop up their living environment.


First of all, the political regime under Libertarianism would have implemented the lockdown at fast stage if COVID-19 outbreak had hit during its regime even while losing the short term profits of private enterprises and individuals. Libertarianism is certainly the political ideology encouraging profit maximisation as a virtue whereas it takes account of consequential outcome of both economic and social actions. In case that the risk of spreading COVID-19 is mitigated with the best effort even with some significant costs, the pandemic outbreak is more likely to effectively diminish faster enough to recapture revenue to compensate their temporary loss.

Libertarianism denounces government not balancing their tax on individual citizens and their gain from their tax contribution. When government grows so bigger that it becomes more difficult to maintain the efficiency of resource flows because the administration cost for monitoring and transportation grows bigger. Then, the cost overwhelms the benefit of government redistribution scheme while relying on big government. Therefore, Libertarianism claims for minimising and decentralising government to reduce the administration cost at the optimum level in order to achieve in the equitable balance of individual citizens' contribution and their net benefit from it even under such an emerging pandemic situation without sacrificing their public safety.

The anti-Libertarian big government advocates claim for raising taxes during the stable period to prepare for the public fiscal expenditure for this sudden critical disaster. This policy is politically controversial because it requires a considerably high level of political morality and administration cost for monitoring against embezzlement as well as of economic rationality for knowing the optimum level of tax rate not harming the entire economic and social activities. Furthermore, even if they could establish this economic political administration, it is troublesome to convince citizens to admit increasing tax burden on their income.

On the other hand, using the money supply in case of this emergency case scenario of the negative output gap expansion is considered to be a less politically controversial method than raising taxation to fund the temporary public expenditure. Libertarianism regards highly of taking advantages of the capitalist market economic and political system in order to accomplish its ethical goal. Although some branch of Libertarians may disagree, many Libertarian thinkers admit to use the monetary policy to increase the volume of the publicly traded currency (also called the money supply) at the excessive rate as a temporary countermeasure against a temporary problem.

Some may be concerned with the inflation risk caused by the excessive currency flow against the productivity rate. By contrast, the loss of the longer term productivity rate caused by abandoning human resources losing their income sustaining their life as well as the public infrastructure losing its public funding will trigger the more serious negative inflation called stagflation. There need to be a solution filling the negative output gap caused by the damage caused by the sudden pandemic outbreak because the sudden output gap expansion is quite likely to cause the long term output loss.

The negative inflation occurs when the money supply rate is continuously exceed what the productivity rate suggests in a long term as an addiction of its reliance. By contrast, the temporary expansion of the money supply is seen as an effective compensation for a spontaneously occurring productivity loss as a strong intensive medicine. This medicine, like the chemically derived one, usually induces a negative side effect like addiction and destruction of the long term health meanwhile it is often required for curing the spontaneously caught critical illness. All in all, the prescription for the monetary policy matters the effect of the money supply.


Secondly, Libertarianism affirms that there needs to be a public sector as a certain alternative form. Of course, Libertarians support the market economy composed of private sector majority in order to allow healthy business and cultural competitions among innovative private economic agents to establish the environment naturally stimulating physical as well as cultural development. At the same time, Libertarians realise that there are some industries which cannot be stably developed in a market competition.

Adam Smith, the father of economics as well as one of the remarkable Classical Liberalist philosophers, explained that defence, education, and healthcare are those which cannot be stably developed and sustained in a market basis. Furthermore, in the study of economics, means of transportations, e,g, road, rail, sea & air ways, inevitably needs to be managed by a public sector. These industries are the ones which a considerably high share of the public sector should be involve to manage.

What Libertarianism criticises about the existence of the public sector is that government monopolises the initiative over the decision making processes of its management. Libertarianism puts priority on individuals' voluntary cooperation over the government cohesive involuntary force to prop up the public sector. It is the cooperative where the responsibility of the expenditure is allocated and the management in general are determined by voluntarily participating individuals for this public sector project.

In case that there needs to be an opinion leader efficiently deriving the final decision outcome even with some force, Libertarianism expects this opinion leader must be rational enough to understand the process of maximising the utility of the majority with their determination. One branch of Libertarians called Paternalistic Libertarian claims for an existence of the rational authority whose members are selected according to their ability under a strict meritocratic scrutiny in order to allow them to become the leading position of a particular sector.

All in all, Libertarianism is not negligent about running the public sector; it is cautious about running the public sector which is far from the pressure of reforming their management under competition. The idea from the cooperative from the classical economics can be still referred as a possible alternative of running public sector where more individual citizens are allowed to participate to represent their voices to fulfil their real demand. The government authority running the public sector should be questioned whether or not they are rational enough to run the public sector maximising the utility of citizens.


Regarding the topic of this essay, healthcare is the hotly debated factor under the currently ongoing pandemic situation nowadays so this essay purely focuses on healthcare only to debate about the public sector. The nature of the demand curve for healthcare is notably different from the other majority industries.

Nobody wants to be sick so everyone prevents the possibility of being in the situation of demanding healthcare goods and services so often. In another word, there does not need to be any significantly higher volume of healthcare service to increase the utility of one individual because the essential difference of body nature is insignificant among individual humans. One vaccination is significant for one individual to take to prevent from a certain virus infection, but taking several times vaccination within a short term period does not significant to prevent the infection.

The other characteristic of healthcare which suggests it is not suitable to merely rely on the market competition to be developed and sustained is how the risk premium is set in the healthcare industry. Rich are more able to mitigate the risk of becoming ill with more choices whereas poor have limited choices inducing them to be vulnerable to illness. Therefore, in order to maximise the profit for healthcare insurers in the private sector, the risk premium is set regressive against individuals' income. In another word, rich can afford healthcare with cheap price meanwhile poor can only afford with high price.

This mechanism stagnates the development of both material and spiritual aspects of human beings as long as the healthcare is left alone in the private sector competition. Then, it eventually requires some public sector intervention in order to divert from this regressive direction. Some degree of resource distribution appropriate for healthcare to enable the more progressive distribution of goods and services is then requisite.

The problem mentioned by Libertarianism is that the distribution process conducted by the big government scheme tends to be inefficient. It should require more voluntarily intervention by majority citizens demanding the efficient services. In particular, under such a historically unseen pandemic of virus infection, Libertarians are those who should raise the voice loud to criticise the current inefficient ineffective government action toward COVID-19 spread. The security without oppression shall be the keyword for Libertarianism to fight in the war against COVID-19!!

How free can individuals be in liberalism under a rational expectation

The editor claims for liberating individuals and the motto of his project is spreading liberalism (In the U.S.A., it is referred as Libertarian or Classical-Liberalism). By contrast, there is another task to consider after liberating individuals to live in a liberalised world. The task is considering what kind of freedom individuals achieve in their aspiring liberalism.

It is also important to note that liberation means to free someone whereas its meaning contains a far more comprehensive concept than mere freedom. Generally speaking, freedom is considered to be the unconditional freedom and limited to a certain individual and a group meanwhile liberty promotes a conditional and comprehensive freedom for individuals and their living world. All the other political philosophies claim for unconditionally expanding their own freedom for their own interest and ego for a limited numbers of individuals belonging to their interest group. On the other hand, liberalism regards highly of expanding the comprehensive freedom sustainable in the long term for all individuals and their living environment by occasionally restricting some form of the short term freedom.

In another word, individuals are not allowed to be unconditionally free in liberalism, and the guiding principle of how freedom is distributed among individuals can be more complicated and restrictive than the other political philosophies. Liberalism attempts to maximise the aggregate freedom by reforming the flow of available freedoms among individuals. Then, as it is so complicated that there are different perspectives on how to achieve liberalism, and it has been debated among unique political philosophers to determine what form of liberalism should be and how individuals should sustain their aspiring liberalism in their living environment.

The firstly introduced concept is the liberalism guided by a philosophical guiding principle promoting as well as controlling the liberty among individuals. In this concept, individuals pursue liberalism as their political ideal where individuals voluntarily act to fulfil their freedom within the condition whilst allowing the others' freedom within the condition and establishing the long term sustainable liberty for all. Individuals are endowed with the right to be free meanwhile they have to fulfil the duty to obtain their right, and there is no authority cohesively enforcing them to do so that they are encouraged to voluntarily trade off between their right and duty. The duty includes the following two things. The one is the virtue where individuals work at something they are excel at to contribute for the others and their environment. The other is the moral and legal guide line which individuals are discouraged from deviating from in order to sustain the balance of their permitted freedom for each individual and their aggregate long term freedom for all individuals. This is considered as the idealistic liberalism because this is the ideal situation where individuals voluntarily pursue themselves for accomplishing their ideal.

The next introduced concept is the liberalism guided by more realistic needs and wants which are notably biological and psychological. Instead of aspiring for an ideal (the comprehensive philosophical and political meaning of freedom), this focuses on the matters concerning with biological survival competition and psychological interference among individuals. Individuals freely trade off their pleasures and pains directly related to their biological and psychological sensation instead of abstract concepts like right and duty. Their limitation of freedom is determined spontaneously at the equilibrium point where each parties of individuals agree on the spot. Furthermore, when it comes to the matter of fulfilling the interest of an institutional group of individuals, then it considers this institution as a big organic body of one individual where the individuals living within it are supposed to act as though they were biological cells and cogwheels of this institutional body. Within it, individuals may have to occasionally sacrifice their freedom in order to increase the freedom for their living institute. There are ongoing conflict between different institutes, between an institute and individuals living in it, and between individuals themselves. Instead of their shared principle, the power balance determines the stable outcome of the distribution of freedom. Therefore, there may need an authority powerful enough to accomplish it although this authority must be rational enough to promote the equitable fair trade among these conflicting parties.

These two concepts seem to be conflicting theories not philosophically agreeing with each other. The first idealistic concept seems to be the closest to the world succeeding in establishing liberalism although it is still unrealistic to expect all individuals living in this world to share one universal ethical principle. It may conversely require a moral entrepreneur autocracy to cohesively teach all individuals to implant this principle into them before enabling all individuals to voluntarily act themselves if requiring to establish in the relatively short term. In order to establish this idealistic concept, it will require time, effort, and perseverance of promoters of liberalism to gradually enable all individuals to be enlightened with the ideal. The second realistic concept may be far more effective to instantly establish the liberalism than the previously introduced idealistic one because the stimulus of inducing individuals are visible and immediately control-able variables. The problem of this realistic concept is that it induces to the state where liberalism gradually declines in the relatively longer term after the physically stronger individuals and institute survive to monopolise the power of the trade. All in all, both the former concept and the latter concept have advantage and disadvantage of establishing liberalism.

In order to keep insisting on liberalism, liberalist theorists and political activists ought to recall both the concepts and somehow synthesise them to create their own theory of form their own liberalist theory. On the spot, it had better refer to visible and understandable variables for majority individuals to settle their agreement for maximising the freedom of all parties simultaneously. At the same time, it ought to recall the abstract principle of liberty in their mind which promotes not only physical but also spiritual/philosophical aspirations of individuals to voluntarily sustain their liberal life and furthermore expand their liberty. Under the certain condition where individuals are rational to chose and their living environment provides them with the rational options, these two concepts are essential to take into consideration to think of liberalism. There are more other conditions of pursuing liberalism than these previously mentioned two concepts meanwhile these two concepts are most hotly debated topics of theories of liberalism. From the editor's point of view, these two concepts can be synthesised together under the condition where both individuals' choice and their living environment's options are rationally available.