The Irony of Fate: Russian New Year Tradition Movie

This is the movie strongly recommended by my female friend from a Russian speaking country.

According to her, almost all Russian speaking people watch this movie in the night between the new year eve and the new year day. The reason why this movie is popular is that watching this movie before the new year comes makes people really happy, content, pleased, and entertained, and happily welcome the new year.

This movie is a love romance movie which contains Russian humours. Russian humours are quite unique. We see the humours from experiencing a little bit of pains in a funny incidence. Russian people seem to know how to laugh at unexpected incidences with some pains. We can see a strong pleasing humour from their natural ability to overcome any unexpected incidence and always expect a better outcome afterward by making fun of it instead of remaining the pain hurting them.

This also involves a secret rhetoric to criticise the extravagant USSR administration by using an example of their housing development plan. The great ability of Russian film makers is that they produced a love romance movie which does not look like harshly criticing the USSR administration. They simply made a fun of the negative influence of the administration in the Russian humours! The USSR government official would have never felt being criticised at all, and they would have simply enjoyed seeing the funny humour and unique charming personalities of the characters in this story!

This love romance is so diffrent from cheesy movies which always show provocative sex scenes in order to attract mobs to watch. This Russian movie is a traditional love romance which shows having experiencing dilemas and struggles to acquire a loving relationship with each other. Unlike the films shown nowadays, this Russian movie expresses the complicated feelings these young adults face, and how this complication developed their romantic mood. The story in this movie takes place in the contemporary time when majority of young adults still had a naive attitude toward loving relationship. This story may make young adults, and even teenagers, nowadays think these young adults in this story are too naive and jevenile. Nowadays, the romance these characters in this story experience seems to no longer exist so that some young generations may find difficult or even impossible to understand the meaning of the love of these characters in this story. However, I am happy to introduce these young generations to watch this movie as well.

This is educational to learn that openness of sexual relationship and having a big love romance are different from each other. At the contemporary period, people might not have been to flexible to express their emortion to each other unlike nowadays. These contemporary people have struggles in expressing their emortions and then suffer from dilema and regrets more than those nowadays. I do not mean the feeling and attitude toward love nowadays is faded. In fact, I embrace the flexibility and openness of expressing love, by means of physically and mentally, nowadays, and detest the reluctancy on expressing love in the old days. Nevertheless, the feeling of romance becomes bigger when the obstacle of expressing and/or obtaining love becomes bigger. Therefore, in this movie, we can discover the love romance which grows in the sorrow, the struggle, and the achievement after overcoming the reluctancy and the obstacle in the old day men&women relationship!!


Well, I hope everyone enjoys watching this video. This is a really good asset of people having lived in the communist Russia period! Click the following link to go to the website to watch "The Irony of Fate"!!

* Russian New Year Tradition Movie:
- The Irony Of Fate
http://video.kylekeeton.com/2008/12/russian-video-new-year-tradition-movie.html





* The image of this picture is from http://darim.info/59870-ironiya-sudby-ili-s-legkim-parom-saundtreki.html.

The Prisoners' Dilemma in the EU Parliament concerning the Fiscal Unification

Last day, Ms. Merkel said "At least, this is the second best outcome" in the treaty concerning the EU fiscal unification. She wished if all EU nations had agreed to participate the fiscal unification plan as the best outcome. However, there are some nations, such as the U.K., who objected to the participation in the rescuing the European economy by the fiscal unification. Although there are substantial numbers of the EU countries agreed to participate in rescuing the European economy by their unified fiscal stimulus plan, the best outcome (all the EU nations participate) was not accomplished.

The matrix shown above is the Prisoners' Dilemma matrix modified to explain the Prisoners' Dilemma in the EU parliament concerning this treaty on the fiscal unification. At this time, this Prisoners' Dilemma matrix is based on the mixed strategy which considers all agents do not act like the prisoner in the Prisoners' Dilemma theory. In the pure strategy of the Prisoners' Dilemma theory, all agents decide to take their action 100% rationally, do not trust each other to cooperate together, and cannot exchange the information between them. By contrast, the mixed strategy takes the possibility of agents not acting 100% rationally, cooperating together, and exchanging information between agents. Therefore, we never know how these agents select their choice.

In this matrix, there are two groups of EU nations, Pro-Europeanists, such as Germany, France, and Benelux nations, and Euro-Sceptics, such as the U.K., Sweden, and Czech. This model generalised to suppose all EU nations belong to either groups, and both groups' decision has a 50% influence over European economy.

The bottom left cells of this matrix are deleted because it is less likely that the Euro-Sceptics sign the treaty whereas the Pro-Europeanists do not.



If this game is based on the pure strategy, the Eurosceptic group would definitely not sign the treaty. The benefit to the Euro-Sceptic group will gain the tremendously high benefit by not signing the treaty when the Pro-Europeanist group sign the treaty. Furthermore, in the pure strategy, the Pro-Europeanist group would have given up signing the treaty as follow:



Because, in the pure strategy, both groups are afraid of the situation that the other group gains the free riding benefit by not signing the treary. The pure strategy does not take account of any action motivated by an intuition, a superstitious belief, altruism, an expectation that the opponent may cooperate, and an anticipation without logics. All groups select their choice completely based on the benefit coming from the rational and logical but selfish interest if it were the pure strategy. Therefore, in the pure strategy, both groups take the possibility that the Pro-Europeanists would not sign the treaty while the Euro-Sceptics would sign the treary (This is a very odd case which would not happen in the real world) into their consideration. So, that is why the Ms. Merkel's wanting outcomes are the least likely in the pure strategy. This is the reason why it would be the case, even in the real world situation, that both would not sign up the treaty even though both groups could maximise the utility if both sign up the treaty if it were based on the pure strategy.


By contrast, the last resolution on the treaty was based on the mixed strategy. Even some Euro-Sceptic leaning nations took account of the possible benefit for themselves coming from signing the treaty by knowing almost 100% of the Pro-Europeanist leaning nations would sign the treaty. In the real world, especially in such a big scale rather than two prisoners in a separated shuttered cell, there are always cheap talks, a flexible flow of information exchange, and irrationality caused by human-emotion and belief in something superstitious, and/or anticipated outcomes rather than the outcomes derived from logical analyses. Thus, everyone knew that all the Pro-European leaning nations were more likely to sign the treaty, and the Euro-Sceptics leaning nations would not make the loss by any choice they could select. This is why Ms. Merkel really wanted all the EU nations signed the treaty.

The matrix of the outcomes in the mixed strategy is as follows:



The outcome of the last resolution could avoid the worst case scenario, in which all the Euro-Sceptic leaning nations did not signed the treaty, and either 100% or 25% of the Pro-European leaning nations signed the treaty. If the worst case scenario took place, all the nations who signed the treaty had to suffer, and the rest of the nations who did not sign the treaty could gain the free-riding benefit. This is what Ms. Merkel was afraid of, and Mr. Cameron would have induced if not only the U.K. but also substantial numbers of nations did not sign the treaty.

The outcome was the second best according to what Ms. Merkel said. Majority of the EU member nations (more than 50%) agreed with the treaty so that the outcome became the middle right cell. Although it could not be in the bottom right cell, it did cause neither the decline of the power of the EU economy (The center cell) nor the collapse of the Eurozone (The top left cell: The collapse would be 100% possible in the pure strategy), nor the free riding by the Eurosceptic leaning nations (The top middle cell and the top right cell).



Nonetheless, it was almost falling into the worst case scenario (either the free riding by the Euro-Sceptic leaning nations or the collapse of the European Integration) unless the Pro-Europeanists had given up signing the treaty by knowing all the other nations would not sign the treaty. This is why Mr. Cameron's reaction caused to significantly lose the trust in the U.K. from the EU. At least, Mr. Cameron should have acted not explicitly like what he has done. He should have been wise enough not let any one to know the U.K. has wanted to keep the distance from the fiscal unification. The way Mr. Cameron acted was to make the Pro-Europeanist nations to think the U.K. is quite happy to sacrifice the EU for her own sake. I did not disagree with the Euro-Scepticism at all. But, I just wanted him to know this Game Theory! All political leaders, diplomats, and any those who have to face a big complicated decision making have got to study this Game Theory!!

The CBA of the EU fiscal unification and Mr. Cameron's failure in the Game Theory

The Eurozone countries are no longer able to give up the monetary union.

Even though the cost of continuing the monetary union is high, the loss of benefit when they dissolve the monetary union is very high.

As one of this blog entries [Sunday, September 04, 2011: Empirical evidence prooving Liquidity-trap: Lower interest rate does not stimulate economy ] demonstrated, all Eurozone member countries, except for Ireland, share a strongly harmonised business cycle. The dependency of these Eurozone countries (excluding Ireland) on the inter member state is extremely high.

Furthermore, when these countries abolish using the Euro, the value of their national debt will be almost worthless. Majority of Eurozone nations, especially the Mediterranean ones and the newly entered Eastern European countries, were benenefitted from their national debt value based on the value of Euro. These national debt is valued not only on the credit of these countries itself but also the credit rate of the entire Eurozone economy. Therefore, leaving or dissolving the Eurozone will decrease the value of their national debt, so these countries will suffer in their public finance. This means that these countries eventually have to go back to the old system relying on the excess money supply which induces a high inflation in their countries. (* Read "2. The problem caused by the monetary policy transformation" in [Saturday, July 23, 2011: The European Monetary Union is inevitable, but has to be fundamentally revised ])

Even Germany will be indifferent between restoring German national currency and keeping the Euro. German GDP relies on the export and German industries expanding their business in the EU member states with a low cost of labour, corporation tax, land, and utilities. In addition, German tourists visiting European (Tourism is an import from foreign countries to home countries: The monetary transaction of Germans touring foreign countries is German import from abroad). Therefore, the cost of German economy of leaving/relinquishing Euro is equally significantly high as same as keeping and assisting the European Monetary Union (EMU) by German effort. Germany may do well even she leaves/dissolves the EMU. But, the loss of the benefit Germany is gaining from the EMU is certain, and the cost of leaving/relinqushing Euro is uncertain.

All in all, even though the cost of keeping the EMU is high, the balance of the both cost and benefit all these Eurozone countries have is certain. The benefit will be certainly lowered by dissolving the EMU for both Germany and the rest of the member nations. Thus, the certainty of keeping and improving the EMU is certain at least, therefore the optimum solution for the European economy despite the high cost of reforming and maintaining the EMU.


------------------------------------------

2. Mr. Cameron's failure in the Game Theory

On the other hand, the UK and Ireland will suffer from participating thsi scheme due to their independent (dis-harmonised) business cycle with the continental Europe. However, I would like to blame Mr. Cameron's unwise way to excuse to avoid participating with the European fiscal integration. The diplomacy is a serious mind game. As I have studied the "Game theory", I understand the importance of reading the mind of opponents, and not being too honest.


This considers both prisoners do not trust each other fully and there is no communication taken place between them.

Even though both can gain the best outcome (if they still think of each other as friend) by cooperating together by insisting both of them are not guilty, they are more likely to incooperate with each other. The most likely outcome will be that both prisoners will be guilty. This is because you can obtain the better outcome only for "yourself" by betraying your partner. You also may think that your partner is also about to betray you to gain the better outcome than helping you. Therefore, both you confess your partner is guilty and your partner confesses you are guilty.

However, if both of prisoners trusted each other and cooperated together to support each other, then both of them would not confess their partner is guilty.



Ms. Markel's feeling must feel like Henry (the guy in this picture) betrayed by Dave (Wow, same name as Mr. Cameron's first name accidently lol). In the conference, Ms. Merkel said that the best outcome would be that all the EU nations including both the Eurozone and the non-Eurozone cooperate together. However, it fell into the "second" best outcome in which not all but many EU nations agree to participate. From now, not only Germany but also the other EU nations start regarding the UK as an incooperating member in the Game Theory. All cooperating EU nations will act like the prisoners trusting in the previously shown matrix. By contrast, between the UK and the Europe will be the prisoners not trusting each other in the matrix.

When one player, whose chose has a high influence, chooses an incooperative answer, it will be a threat on the opponents. Now, the EU has started to see the UK to be an incooperative opponent (The free rider) so that the EU's treatment on the UK will become harsh from now.

If Mr. Cameron wanted to keep a distance from this treaty on the fiscal unification, he should have pretended he would still cooperate with them but inducing the consequence for the UK not to sacrifice her national interest a lot..... The U.K. obviously wants to avoid being too much involved in the fiscal unification. It burdens a cost on the UK because the UK is a relatively richer country so the EU expects Britain to participate or even sacrifice herself to help the EU. However, it is an extremely tough task for the U.K. to declare keeping distance from the EU fiscal unification plan. The U.K. has signed up the trade agreement with the EU since the U.K. joined the EU so that the U.K. has a responsibility for the entire European economy. Therefore, the U.K. has to be very wise to keep the distance by preventing the situation that the EU realises the U.K. is incooperative. I do not have any particular advice for Mr. Cameron. But he should have not been too honest to show the U.K. keeps an incooperative attitude on the current EU fiscal unification. We should have learned from what Machiavelli taught in his book "Prince" to act wisely in a foreign diplomatic game...!

Discussion on European Integration

The European integration has failed* due to the compromise of economic rationale (Maastrict treaty on economic policies), and Kantasian = deontologist passion blinding both Europhiles from the currently shown reality which we can immediately observe....!

* Okey, I meant the "current administration" of European integration failed so that it requires the "new" administration. They still postpone the final weapon to tackle with the Euro crisis, which is the fiscal integration by establishing a common fiscal policy ordered by the EU federal government. But, they certainly "must revise Maastrict treaty " (I bold this word), fundamentally restructure of both labour market (by reducing barriers to enter any national labour market) and capital market (unifying the financial market regulation) to make them more flexible, and reduce the power of national governments (e.g. abolishing the right of incurring national debts, and irrational ego unstabilising the integration process).


But, they still postpone the final weapon to tackle with the Euro crisis, which is the fiscal integration by establishing a common fiscal policy ordered by the EU federal government. I don't think they are going to give up their economic integration so easily. I can see a sort of Kantasian = deontologist passion: They don't see the fact = reality they can obviously see: They merely focus on the anticipated outcome based on their fundamental principle rather than the reality they can see at the immediate moment. Therefore, for both Europhiles, the cost burdened on the European integration doesn't matter for them to quit striving to acquire their anticipated outcome.....

Judging from my point of view which is based on the "reality", "sum of utility", "freedom of choice (individual liberty)", and "economic rationale", the European integration has failed due to the compromise of economic rationale (Maastrict treaty on economic policies), and over-idealised analyses and expectations of European integration based on their fundamental deontologism which blinds them from the currently shown reality which we can immediately observe....!



I am not an enthusiastic supporter of the European Federalism: I would support only if they want to keep the common monetary policy. Actually, compared to North America and Asia, European population mobility rate is still low, which is a disadvantage of not having a strong federal gov't intervention into the business cycle of each member country. However, Europe has more frequent trade tie (GDP share of inter-country/state trade) between the member countries (states) than the USA. This fact lead the European monetary integration inevitable. The US monetary integration works better than European because they naturally had a common interest to make one strong unified nation without the conflict of interests like what we see in Europe. Even though the US citizens are very diverse (sharing each own different identity), they naturally have a very strong fundamental principle as a US citizen which works as "a priori" of their identity as the US citizen. Even though the US citizens are proud of their diversity and keep their own background identity from the motherland where they or their ancestors are from, almost all of them share their pride as the "US citizen". There is one remarkable political leader, who came into the power in a half century ago, said that the stable process of European integration requires one super-national federal authority which conducts them structurally and provides the "a priori" of their identity. His analysis was, and still is, underestimated, but the current situation proves his analysis was not false.

I agree with you having said that there is a risk of the federalism encouraging some member countries to become like Detroid and some minority states in the USA. The current US fiscal and monetary structure is based on Hamiltonian political model. Hamiltonianism advocates in the meritocratic/technocratic bureaucratic centralised structure which puts priority on socioeconomic stability. Thus, this Hamiltonian system merely focuses on the interest of the USA as a whole so that sacrifices the minority states' interest for the US federal interest. This induced that change in the industrial structure caused the highly volatile business cycle of some cities like Detroid. This is one aspect reminding why there are still substantially many people advocating "The South Rise Again". I am not particularly fond of Hamiltonianism at all. However, I noticed that Hamiltonian was once required when the USA needed to be unified when her people's interest became same to protect themselves under one umbrella of the federal principle guideline. Actually, at the time when the USA shifted to the more centralised federalism at the contemporary period, many uninfluential states were willing to support the federalism and be under the influence of the federal interaction due to the benefit from joining the unified social and economic tie with the other states and the federal authority, and the security required to protect from foreign nations. Nonetheless, nowadays, the USA should be more decentralised and many states started to want to be more detached from the federal intervention. This is that the different needs in different time, place, and occasion. Actually, the Mediterranean countries and Eastern European countries were "willing to" join the European political and economic integration more than Germany wanted them. These nations have already had a strong co-integrated business cycle with the main player of European economy so that it was inevitable they required the common currency to smooth the trade between these nations. The Mediterranean countries' GDP is very reliant on the key players in European economy (Germany, France, and Benelux countries). Italian economic and financial centre, Lombardia, is related to the West and Central Europe with a same or higher degree of the tie with the rest of Italy. Spain and Greece depend on exporting their tourism to these key European economic players. Eastern European nations still suffer from the asset of the USSR administration so that they are clinging to the father ship kinda protection from the EU to wipe out the suffrage from the USSR influence. These factors seem to be a resemblance of the USA transit to Hamiltonian nation state. If the centralisation like the US Hamiltonianism is required and answers to the great sum of utility, it should be adapted to temporary. I don't hope the strong federal reform continues in too long term. But, it looks like a temporary centralisation seems to be required as an emergent surgery for Europe....

Global Wealth Tax is Inevitable to Sustain Capitalism

This is a new policy which should be "inevitably" introduced to this globalised economy. As the economic activities of individual economic agents have become so globalised that richer individuals transact their income and wealth across national borders frequently. Therefore, taxing rich has become more complicated and the income tax organised by one nation is not able to tax on richs' income efficiently. If individuals have freedom to move their wealth across the border, the nationally based tax system is not longer able to tax on their income efficiently and even fairly.

Furthermore, managements of the public goods (natural resources, environment, and very externally contingent industries such as nuclear technology and air traffic) have become globalied as well. It seems to be more necessary to manage these public goods usage and distribution in a globalised scale than national scale than the past as the economic activities are globalised more than the past. Therefore, there needs a public fonding resource based on a global scale i.e. Tax by a global institution to spend for global public goods.

Some monetarist zealots may claim that this is a socialist system which disturbs an equity of rich individuals. Nonetheless, if they blame this introduction of the new policy as a socialist idea, we also should abolish the progressive income tax based on national and regional scale. If they supported the complete abolition of tax system, government, public sectors, corporations, and nation states, I would agree with them. However, as long as they still stick to keeping these institutions in our community, the claim against the global wealth tax is not convincing.

I believe the progressive income tax is a necessary evil. As the world now still requires us to tax system, government, public sectors, corporations, and nation states to maintain a healthy usage of public goods, we inevitably need the progressive tax at the "minimum but optimum" level in order to be able to manage the public goods well. The income tax is the unfair tax, but the most efficient tax to take it by means of marginal propensity of saving. It is a macro economic issue. The richer individuals tend to split their disposable income into saving which does not goes into the economic stimulus. By contrast, the poorer tend not to be able to split their disposable income into saving. So, the higher income tax on richer is less likely to reduce their income expenditure into economy and reduce their utility by taxing on their income. So they are more likely to maximise their utility at the given disposable income level after the newly increased income tax. On the other hand, the higher income tax on poor reduces their income expenditure into economy and reduce their utility because their disposable income is reduced from the level maximing their utility.

As a matter of fact, the introduction of the Global Wealth Tax may reduce the bureaucracy rather than keeing the income tax collection based on national and regional level. It would be easier to tax some rich individuals transacting their wealth across the national borders than national governments cover the cost of scrutnise how these rich individual keep their wealth. This new tax also keeps the cost for rich individuals to move across countries by means of the different tax systems and the credit rating in each different countries. It will be possible if the introduction of the Global Income Tax system enables them to exempt from national income tax and maybe regional income tax as well. The middle and the lower income individuals will be taxed nationally and regionally, but the high income individuals should be taxed globally and exempted from paying national and regional income tax, or exempted just from national income tax and still paying regional income tax. The global economic institution should then distribute the Global Wealth Tax revenue to both the expenditure for global public goods and the government expenditure for national government and regional local authorities.

J.M. Keynes was actually the savor of capitalism because he said that, as capitalism grows, the wider scale of intervention becomes inevitable like establishing the IMF in 1944, and establishing the EMU in 1990s and 2000s (and possibly the European federal government). This is a next step of what J.M. Keynes described about an evolution of the global economy. I definitely think this global tax on rish is rather a capitalist idea. The reason why is that in order to make a process more efficient, fair, and effective, the progressive tax system has to be revised and evolved in order to sustain capitalism.

If we support capitalism going on, we inevitably need to support introduction of some globalised public economic system. Otherwise, the negligence of introducing a new global based policy causes instability of economies in this globe, causes economic catorophe, and then rising socialism. In order to stop socialism rising, we must adapt the inevitable global public policy and the institution controlling over it. Capitalism is only one most liberal alternative economic system which distributes the highest sum of utility as much as possible. Socialism and Cultural-Conservativism, the counter-part of Capitalism = Liberalism, are the opposite: retarding, supressing the sum of utility, and idealised system ignoring the natural geometry of market mechanism which inevitably exists in our living world. Hence, the monetalists' and bandit libertarians' objection against the new global capitalist order may help socialism and cultural-conservativism coming into the power. Capitalism inevitably evolves, and we must adapt into the new order following this evolution process as Prof. J.M. Keynes taught us...!

Fed's Monetalism will fail: It cannot save the world economy

.... This is "Nothing but a drop in the bucket"! I really detest the fact that there is still a fundamentalist intiutive ideology of monetalist theory dominating this world economy....! We've got to learn what J.M. Keynes mentioned about the "liquidty-trap"!

Speaking of European mal-functioning economy, the fundamental reason why Euro failed was the compromised role of fiscal policy and financial market regulation. Therefore, the further liquidity into the current European economy will not be effective enough, and only leaves negative changes more than positive changes.



I am sure that these money injected without any fundamental reconstruction of the fiscal structure will just flow into the "saving" rather than averting a further recession or even a depression!

Futhermore, this injection of US$ will definitely cause the further depreciation of the long run US bonds!

The hypowered money theory offered by the monetalist theory does not work because the velocity of money flow is already very low! Extra supply of the hypowered money does not induce a high velocity of money; it is an opposite! The hypowered money only works in the situation that the velocity is already high! The velocity of money is exogenous; not endogenous like what the monetalists say!




As I am now reading a wonderful book written by Prof. Stiglitz about the paradigm of monetary transactions, I know the monetary policy by central banks' role is too weak to influence/control over the monetary transactions in the market. The interest rate, reserve requirement, and money supply are less likely to direct the flow of the monetary transactions. The monetarist theory completely ignores the different characteristics of individuals and financial institutions; they only assume all of us are risk neutral, there is no risk of bankruptcy taken for account, and influences from the information about credit rating!

Monetarists believe that the interest rate and the volume of lending activities are determined merely by the supply of money available. However, in the real world, private banks and financial instutitions are more likely to set their interest rate and control their volume of lending activities by means of the risk premium of borrowers (consisitency and volatility of change in their profit rate, risk of bankruptcy, risk of assymetric information about borrowers, credit rating of borrowers, etc). This fact infers that the traditional macroeconomic policy via the monetary policy seldomly works to control the macroeconomic environment. The characteristics of each individual economic agent is the key issue to analyse the money lending activity.

Majority of these lenders, assisted by the central banks, have already become risk averse so that they are less likely to increase the volume of their lending activity. But, even though, they keep themselves as either risk neutral (acting as what Monetarists assume) or risk lover (becoming more active to invest in a tough economic climate), and then they lend high volume of funds, the risk of bankruptcy still remains same unless the structural change in the real market takes place. They may probaly invest more funds even though these targets of their investment become riskier. However, they will either charge the high interest to cover the unseen risk of these borrowers or charge a moderate interest rate and burdern a high risk of the bankruptcy of themselves. Either case scenario is tough because it is either increasing the cost for borrowers (and eventually induces borrower's bankruptcy, and then loss or even bankruptcy of lenders) or increasing the risk of bankruptcy of both lenders and borrowers. The market becomes more voluatile when the economic sitations becomes worse, the balance sheet of both lenders and borrowers becomes very inconsistent i.e. their profit/loss is unpredictable. In this case, even though the volume of money transaction is stimulated by the central banks' monetary policy, it will end up with the high interest rate (for the security of lenders) or gambling of lenders (welcoming risk of investing with a moderate interest rate to risker borrowers).

All in all, even though the central banks' action offers the sizably low interest rate and/or the high volume of quantitative easining, private banks and any other financial institutions may increase their own interest rate due to the high risk of bankruptcy involved in this investment under this current economic climate. Borrowers still suffer from unchanged or even increased interest rate. The exective members of banks and financial institutions gain benefit from securing the existence of their work place due to the central banks' assistance to their corporate finance by the quantitative easing. Those who can spread their aggregate income to their saving will be benefited, but this kind of individuals tend to be minority under such a tough economic climate. Thus, this action is irrelevant to encouraging the high volume of money lending.

* If you would like to know why and how the structural change of EU economy is emerged, please read "Friday, June 03, 2011
Europe in crisis...! (Click here to read!)"


I often wonder why these big guys in these superior positions have never learnt from history although they are supposed to be educated? When we learn from the history, only relying on the monetary policy channel does not work under the deflationary pressue i.e. the recession period = socio-economic stagnation. The perpetuation of it always caused rise in the oppressive political groups such as Natiz and Japanese National Shintoists.

Only the remarkable legendary economist claimed the danger of deflation is J.M. Keynes. Unfortunately, majority of economists in the history tend to underestimate the impacts of deflation. It is because the deflation is a unique phenomenon which can be only seen in the nations and the globe whose capitalism is developed and spread out. So, many classical economists had not seen deflation during they were alive. The first experience of the recession (and then deflation) simultaneously taking place in the entire globe could be the depression from 1920s to 1930s. J.M. Keynes was the first and probably the last economist who warned the danger of deflation.... When we forget about what Prof. Keynes warned, this world will inevitably be drawn into the "depression"...!

On Striking Action by Trade Unions: Unconfortable Proletariat Culture...

All those went for strike should not be paid! Although I don't say the union bargaining power should be zero, I despise trade unions' influences on economy and their style of living....! Oppresive trade union is one of the notorious obstacle in both macro-economic environment! If I were one of these workers, I would rather choose to go to work at the work place or quit working to go to another place rather than joining this collective bargaining with the comrade proletariats! Although I am not particularly a bourgeoigie, I detest scrumming with these proletariats.... :( I'd rather be a private individual than a tiny member of these proletariats calling themselves "loving comrades" in this uncomfortable collective action :(



If there is not an unnecessary strong proletariats' wage bargaining power, it does not need to have a wealth re-distribution through an intensive fiscal policy which is conducted by a big government. If this excess resistance by proletariats is diminished, we just only need the spontaneous mechanism of free market plus only a little fiscal policy intervention to correct the business cycle movement :)

... It is definitely the time to de-regulate the labour market! We should adapt a further more flexible labour market! Also, they should set a common unified financial regulation of transactions in the financial market in the enture global economy in order to encourage the efficient and stable flow of capital inside the globe! Reduce all the national trade unions in to establish a flexible flow of labourers and capital in the entire globe!

The moment to know soul and spiril certainly exist in humans...

Today, I found and realised that something like soul and spirit exist certainly in this terrestrial world .... It's found in an immediate moment when a person encounters another randomly in an odd place in a transient time zone... Body, face, voice, and action in an immediate moment inspires us like static electric goes through out body.... The action taken by the person was not special, but something like a special spiritual contact certainly took place. It took place in an unusual place. I felt a unique shock when I entered into the space where is isolated from a repetitive daily life. It was like going into a hidden place in a darkening shift from day to night where the unknown mystery is hiding in...




When there is an opportunity to communicate with people from different civilisations, ethnicity, and religions (or ideologies), it makes more possible to feel and understand the quality of soul human-beings are endowed with. Then, it makes also possible to observe the soul of others from our own native background. This experience may lead us to either gain a confidence or become disappoint in people and civilisation of our own. The true strength of human-beings may come from such a quality of soul: The guarantee of obtaining the true happiness and the long term survival of this person and his/her family shall depend on the quality of soul regardless of their physical strength, material wealth, intelligence and knowledge, authority, recorded historical backgrounds, and pleasure coming from subordinance...

The strong soul with a good quality will make a strong sense of feeling a spirit revealing out from each human-being. The characteristic of these spirits can be either weak or distinctive. Human-beings with a weak spirit are those who are made to live rather than live themselves: They live as though they are died. The distinctive ones are either cursed or vital. Cursed spirits harm others by encountering them. The human-beings with a cursed spirit harm us even though they protect us with a physical strength, distribute us an abundant material wealth, provide various kinds of knowledge with their intelligence, hold a strong authority over us, record a long history of survival, and subordinate us to please us. By contrast, the human-beings with a vital spirit lead us to a miracle. The human-beings with a vital spirit impress us even though they are deprived of physical strength, material wealth, intelligence and knowledge, authority, and prideful history, and ability to subordinate.

As Greco-Roman philosophers argued, a priori of human-beings' quality is their soul forming their spirit. We cannot change the quality of our soul within a short time period. The quality of soul is built in our innate nature such as our environment surrounding us, family, culture and civilisation we are from, and the luckiness to have an opportunity to encounter with those who improve our soul. Those without spirit are gradually ceasing away; those with a cursed spirit are rotten in their life and/or starve until they die; and those with a vital spirit thrive with hope even in poverty, deprivation, oppression, and fear...!

Political Philosophical Compass (Spectrum) --- Part 3

... contuned from Part 2:

Hobbes' work had influenced many remarkable political philosophers such as John Loche, David Hume, and Jean Jacques Rousseau. As Loche's philosophy highly influenced David Hume, and Jean Jacques Rousseau, Jeremy Bentham and Immanuel Kant, it can be said that Hobbes, who influenced Loche, influenced Jeremy Bentham and Immanuel Kant as well. All in all, without Hobbes. all these political philosophers in the modern time period would not have existed. In other words, all these modern political philosophers' works were the footnotes of Hobbes' work.

Hobbes had learnt from a lot from two mainstream Antiquity philosophers, Plato and Aristotle. He adopted a theory of Platonian ideal state and Aristotlean virture theory to his own philosophy. However, the clear distinction of Hobbes from these two Antiquity philosophers is that he had never considered what the true moral should be. All philosophers previous the modern ones, not only Plato and Aristotle but also the other ones having existed in the previous and the later time periods, always considered what is the nature of human-beings should be and what is the moral objective of human-beings. Furthermore, majority of these Antiquity and Medieval philosophers always tried to define the existence of the universe and how outcomes of this world are derived to form the universe. One of the few remarkable philosophers who were more apathetics about clearly defining the existence of the universe was Macus Aurelius, the Roman Emperor. Marcus Aurelius stated that the universe is formed by the random outcomes which we cannot exactly discover what and how these outcomes are derived from. Although Marcus Aurelius did not stick to spending a lot of time on defining the existence of the universe, he still yet put emphasis on the universal moral which human-beings ought to follow. As same as Marcus Aurelius, Hobbes also thought the universe is composed of the random outcomes derived from unknown reason. But, unlike Marcus Aurelius, Hobbes did put emphasis on neither the universal moral human-beings ought to follow nor how human-beings ought to be regardless of different situations across time, place, and occasion. Meanwhile, all these Antiquity and Medieval philosophies are solid, synthetic, and focusing on a massive picture, Hobbesian philosophy is flexible, analytic, and focusing on human-beings and their cummunities by parts.

Hobbes insisted that human-nature is permanent and cannot be changed as same as Aristotle mentioned. This aspect shows Hobbes is moral-naturalist as much as Aristotle. But, Hobbes was certainly modest about human-nature than Aristotle. Aristotle stated human-beings are naturally social so that they can govern themselves by letting them alone to decide what to do. By contrast, Hobbes did not agree with what Aristotle defined human-nature. Hobbes claimed that human-beings will hinder each other when there were no particular role to order them to be harmonised, and then fall into chaos. Hobbes strongly put emphasis on necessity of strictly coded laws which bring an order to govern human-beings instead of expecting the human-nature to self-govern human-beings. Laws are created differently according to what form of laws is suitable for different time, place, and occasion to bring an order. Unlike Aristotle put emphasis on the moral objective as "being social" to be humans, Hobbes argued that needs to be good human-beings are different across time, place, and occasion. In addition, there is no clear objective measure to define what is the moral for human-beings to follow. Only the objective for human-beings is to follow the laws bringing them an order whose objective measure also depends on time, place, and occasion. This aspect makes Hobbes to be more subjective than Aristotle, but it yet remains a little objectiveness than Machiavelli.

Hobbes quoted a lot of phrases from Aristotle such as human virtue. Aristotle explained human-beings' virtue is to do what they are good at. Hobbes stated the ultimate virtue which is common among all human-beings is obeying laws and following order. Aristotle was more optimistic about direct democracy which enables all human-beings represent their opinion equally as much as possible. However, Hobbes was highly sceptical about Aristotlean direct democracy due to the problem to work politics out effciently and defining whose opinion is more legitimate than the others when they fall into conflict of decision making process.

Plato, Aristotle, Augustine, Aquinas, and Machiavelli drew a picture of human society by means of the nature of human-beings and how human-beings should be. Hobbes seems to the first person who mentioned something other than human-beings themselves, their nature, and the community structure. He was the first person who mentioned the existence of "law" to be a foundation of moral among human-beings and a stabiliser of their community. The philosophers previous to Hobbes did not consider about how law is given by nature, guardian, people, God, and/or sovereign, and did not define what and how law should be. Hobbes was the first
political philosopher who insisted that political philosophers whould firstly think about and define what is law before thinking about to know about human-nature, how community should be structured, and the existence of the universe. Plato talked about rationality when he talked about ethics (political philosophy). However, unlike Plato, Hobbes did not expect all people to be rational enough to establish an utoppia. Hobbes argued that it is impossible for all people to become perfectly rational beings, but people will be happier and their community will be stabilised as long as the law and the structure based upon it they are following are rationally constructed. Thus, rather than expecting human-beings and talking about an alternative world, Hobbes was the first political philosopher who focused on rationality of law instead of rationality of human-beings and a rationally imaged world view.


Hobbes argued that the best virture of human-beings is obeying the law and following the order, and sin is breaking law and order. Many later modern philosophers argued against this Hobbes' argument, but their theories seem to be just an different interpretation of what Hobbes said. These philosophers agreed with Hobbes for the point that political philosophies have to take an account of rationality and law (including physcially enforced, written, natural=spontaneous and/or any other form based on either a subjective feeling or an objective principle) in order to study about people, their community, and how they function. Therefore, they took a lot of ideas from Hobbes, and reformed Hobbes' theory into their own style.

Hobbes required to have an autocratic institution who is responsibility for legislating the law enforcement, and a strong charismatic sovereign, monarchy and/or any other form of premiership, who represents as a top authority of the autocratic institution. As long as law enforcements created by the autocratic institution are rational and the charisma of a sovereign attract both the institution and people obeying their order, the system will be stabilised, Hobbes argued.

By contrast, Loche, Hume, and Rousseau claimed there should be another form of body ensuring people following the law to stablise their community under order. These philosophers challenged Hobbes' authoritarianism, and suggested to create another form of principle brining an order rationally instead of relying on a strickly stratified autocratic system. Loche insisted on the fundamental principle of morality and the consitution defining what laws should be to convince people to follow. Hume claimed that there is a natural law people naturally adapt to keep themselves under order. Rousseu put emphasis on the existence of the "spontaneous" order which is different from the "enforced" order.


... to be contuned to Part 3:

Milton Friedman attacking hippocratic socialist medical service

This is a fabulous lecture criticising an overly state controlling health (medical) service. This clarifies why free market system is not bad for medical industries to operate unlike what socialists and any anti-freemaketists and financial repressionists describe as. This warns that, when people allow medical services to be marged into the public sector and the degree of government controll increases, peole rather suffer than gain benefit in spite of what socialist government promises.

Islamic World Political Compass

Majority of people outside Islamic world tend to be ignorant about the political ideology of the political leaders in the Middle-East, South East Asia, West Asia, Africa, and the Western world. Some Westerners claim that Osama bin Ladin and Saddam Hussein cooperated together but it would be impossible. Osama bin Ladin and Saddam Hussein have a totally different ideology from each other, and they had never seemed to be able to cooperate together.

Osama bin Ladin was an Islamic conservativist who detested combining Islamism with any modern political ideologies such as socialism, pan-Islamism (United Islamist nations), and political party ideology. Osama bin Ladin formed his own politically influential groups such as Taliban and Al Qaeda. But, his initial aim was to establish individual people and their community following the traditional Shariah law, and keep them away from modern politics. Unlike Sadam Hussein and Colonel Gaddafi, Osama bin Ladin was not interested in modern ideology such as either forming a strong iron fist political party for himself such as Hussein did or establishing a political community gathering different people from different nations to be unified under a strong modern political administration such as Gaddafi did.

By contrast, Saddam Hussein was a hard core atheist and highly influenced by the USSR communism. Even though Hussein persecuted all members of Iraqi Communist Party, his political ideology was a resemblance of Stalin's. As same as the communist nations' leaders such as Stalin and Mao Zedong, Saddam Hussein wanted his nation to follow him and his iron fist political party by admiring his charisma. If there were an Islamic worship in his nation, the loyalty of his nation to him and his political party would decline because people no longer worship him and his party as a Godly charisma.



Nowadays, the movement to use Islamisn as a tool to establish the modern nation state or a tool to fight against the political oppression. Therefore, some people tend to think of Islamism as a sort of the modern political ideology. However, although the original Islamism takes account of economic, cultural, and metaphysical taughts, the style of Islamism is different from some Islamic political thinkers nowadays regard. The modern political ideologies focus on analysing how individuals live in and react to law, legislation, monetary economy, fiscal policy, and ideologies political parties hold, and attempt to establish these systems which are more likely to stabilitise a community where individuals live in, benefit to particular one individual or a group of individuals, bring a high level of utility to individuals living in a community, and/or gurantee individuals' right. By contrast, the traditional Islamism focuses on how individuals are living supiritually well regardless of how their surroudings are in order to accomplish what God wanted human-beings to be, and only created their own law as a principle guide line for them to live for their God's sake. All in all, the modern political ideologies regard the law to be a contract between individuals themselves whereas the traditional Islamic law (Shariah law) regards the law is a cntract between any individual and God.

The modern political ideologies regard human-beings are well-determined, semi-rational, and consistent enough to follow their own decision based on their needs, wants, and values. Therefore, they trust in the contract with only human-beings without will of a super-natural supreme-being. This trend is high influenced by the Christian way of thinking which claims the worship of God and religious taughts should be separated from the secular authority, law, and custom in order to keep the religion from interests of the secular world. Thus, as the modern political ideologies were highly inflenced by Christianity, even though some of them were highly sceptic about or even strongly against Christianity, so that all people following the modern political ideologies are influenced by this separatino of the religious world view and secular world view. This aspect motivates individuals to create their own moral, law, legislation, their own ethics about monetary economy, fiscal policy, and their custom and culture by human-beings' own decision based on their needs, wants, and values.

All the traditional Islamists, who are not only Osama bin Ladin and the fundamentalists but also all the genuine Islamic people following the traditional Islamic way of living, believe that individuals are too weak and inresponsible to establish the order. Therefore, the modern political systems based on the contract between individuals is too weak and inconsistent to be maintained so that these systems eventually corrupt individualsm, instabilise their community, and spoils their soul. This is the aspect that the traditional Islamism is sceptical about allowing human-beings to create their own moral, law, legislation, their own ethics about monetary economy, fiscal policy, and their custom and culture by human-beings' own decision based on their needs, wants, and values. These Islamists put emphasis on the importance of the interaction of God's will as a mediator of human-beings' own decision based on their needs, wants, and values. It means that individual human-beings make a contract with God at the first stage, and then agree or disagree with the other human-beings. This characterisitics denies the existence of the modern political ideologies, which over-estimate human-beings and their decision making process as explained previously, take place in their community.

Osama bin Ladin was one of these traditional Islamist who are highly sceptical about the modern political ideologies which over-estimate human-beings. This aspect explains that he wanted to react against this tradition to bring the traditional Islamism based on the contract between individual and God (The super-natural), and was highly sceptical about individuals and the modern political contract.



The modern Ismamic political activists combined the modern political ideologies and the traditional Islamism together.

Colonel Gaddafi attempted to combine Socialism, the modern Western political ideology, with Islamism together. His aim was to unite people by both the modern contract between individual people and the Islamic contract between each individual and God. Gaddafi combined the ideology about the the equality among people insisted by the Western socialism and Islamic tought insisting all people are equal in front of God. His original aim was to put emphasis on the equality among people to attract his supporters and alliance nations to him.

Malcolm X, in the United State of America (USA), was also the one who combined the modern political ideology with Islamism. He combined the human right idea invented by the Western modern ethics and Islamic attude of anti White suprematist Christinamism (* Only mentioning a particular kind of Christian groups). Malcolm X thought highly of protecting the individual right stated by the modern political philosophy which is formed by the contract between individuals in their secular law. However, he also thuoght that the equity (fairness) of this contract was violated due to the situation that some human-beings are not considered as variable to be treated fairly. Then, he thought all individuals living in a community need another form of strong doctrine which implant the idea of all individuals' right into their mind. His choice was Islamism which claims all human-beings are equal in front of God, and always put emphasis on the interaction of God's will while human-beings are making any contract.

The problem of these modern political figures is that both could not develop their political ideologies to be influential in a long term. We are not sure whether Gaddafi once had a strong altruism to use his political ideology to unite people and put the equality policy into practice or he initially wanted to use his ideology just to attract people to obey him. Nonetheless, regardless of what he might have initially thought, he turns up to be very corrupted,and operated the policy which was very different from what he promised people to bring. Malcolm X 's policy was so violent that it turns up to become a descrimination using an anti-descriminational ideology. These two were so idealistic and aspired to establish the community which precisely follows their idea that they could not tackle with obstacles in the reality. Furthermore, both Gaddafi's Socialist Pan-Islamism and Malcom X's Black Islamism cannot be accomplished because they combised two different kinds of ideologies, the modern political ideology and Islamism, which regard of a totally different world view from each other as explained previously.


Sukarno, the founder of independent Indonesia, was much more able to achieve to combine the modern political ideology with Islamism. The reason is that he remainded his political ideology, the Islamic State Socialism, only in a constitutional level. Sukarno was pragmatic to put his policy into practice. Unlike Gaddafi, he did not rant his political ideology as if it brings a utopia, and rationally faced with realities. Unlike Malcom X, he did neither violently exaggerate nor enforce the equal right as a fundamental objective to be accomplished. He only refered to the principle of equality, right, and islamic ethics as the objective guide line (not the way it must always be).



Nevertheless, both the fundamental Islamists such as Osama bin Ladin, and the genuine traditional Islamists may say that marging Islamism into the modern (Western) political ideologies lead people and their community far from what Islam treaches. The original Islamism insists well-beings of people come into reality when people in their community become supiritually well by being aware of the contract with God; not with the contract with the system human-beings established themselves. So, they would not want Islamism to be used as a tool for someone who wants to establish a system to rule the others under his/her administration even though the ideology held by this administration sounds wonderful. Therefore, United Socialist Pan-Islamic nation invented by Gaddafi would not be able to convince these traditional Islamic people. It is agaist their theory to exaggerate the right because their religion teaches the nature in this world is severe so that we need to take for granted. Therefore, the hatrate against the oppression to the individual right is unproductive so that they would not agree with Malcom X. They may say that Sukarno's policy was practical to develop a nation where protects Muslim people's life style, their interests, and their material well-being, but does not particularly follow precicely how Islamism requires people to do....

All in all, Islamism is a complex religion, and a mysterious ideology at the same time. In this globalised world where the way of all political systems work is based on the modern (Western) political philosophies (ideologies). Some attempted to use both Islamism and the modern political philosophy together to administrate their own nation. However, the fundamental problem is that Islamism involves a totally different basis of philosophy which may never be harmonised with the modern political philosophy (ideology). Thus, both Islamic fundamentalist, who aspire to enforce people and their community to follow the original traditional Islamist practice, and genuine traditional Islamic people, who just want to keep their own Islamic life style whose Islamic identity is not diluted by adapting the modern (Western) life style, isolate themselves and their community from the influence from any modern political ideologies and the globalisation. This segregationist method has a problem causing a huge tention of conflict between themselves and people from outside their community. Hosni Mubarak selected the alternative way which does not use Islamism in politics. Mubarak operated a rational and secular political administration which can adapt into the current globalising world trend to both protect and develop his own nation. Unlike Sukarno, Gaddafi, and Malcolm X, Mubarak considered Islamism is not practical to be combined with the modern political ideology which bases the philosophy to operate the political administration. Furthermore, Mubaraku realised the global free market system is beneficial for his nation and people living there. So, socialism is a hindrance, and Islamic intervention in his nation's political administration (Although he did not think Islamism is worthless; He admitted Islamism thrives). Hence, although Islamism is respectable religion and an interesting ideology, it seems to be still troublesome to be used for a principle basing any political administration. It will be interesting how Islamism become evolving to be adopted into the political administration in the future though.

Three Dimensional Political Spectrum

* Prevalence was calculated by multiplying the percentage possibility of policy existence and the percentage of people gaining utility from policy. The level of prevalence becomes higher when the colour become closer to red / orange whereas the level of prevalence becomes lower when the colour becomes closer to pale blue. The higher prevalence means possible to both exist and please people whereas the lower prevalence means less possible to either exist or please people, or both.

* Economic scale shows the size of government and adaptability to the market mechanism. More authoritarian implies big government controls economy. More libertarian implies little or non government interaction exists, and adapting rationally to the natural flow of marchet mechanism.

* Political scale shows the degree of freedom from the political peer pressure such as a unified political ideology, an political institute, and a powerful minority group such as a religious institution and a capitalist corporation. More authoritarian implies people are encouraged or enforced to follow the political peer pressure. More libertarian implies that people are more self-governing themselves.

* Personal scale shows either community/group interest or individual interest prevails. More authoritarian implies the community/group interest comes faster than the individual interest. More libertarian implies that the individual interest comes faster than the community/group interest.

Political Philosophical Compass (Spectrum) --- Part 2

... contuned from Part 1:

2: From the late medieval to the modern:

Machiavelli openned the gate way from Antiquity and Medieval to the modern political philosophical world. There is no doubt that Hobbes was inspired by Machiavellian philosophy to write his Leviathan. All remarkable modern political philosophers were highly influenced by Hobbes so that it may be possible to say that all these philosophies were merely the footnotes of Hobbes's work. If Hobbes was the founder of the modern political philosophy, Machiavelli would be the person who evolved the political philosophy from the old Antiquity to the progressive modern philosophy.

Machiavelli's ethical focus was how individuals should act owing to the surrounding evnrionment. Machiavelli had ever mentioned about neither the ideal world (Utopia) nor how human-beings ought to be naturally. His philosophy is about deriving the optimum solution for each different individual to act according to their own individual subjective interests regardless of an objective moral principle. His book called "Prince" indicated how a nation, the community of human-beings, and her sovereign such as a monarchy and any top political leader should act like. Machiavelli's success was having simplified the method to consider and analyse how the world is formed and how the human-beings ought to be.

All Antiquity and Medieval philosphies were too complex to analyse the decision making of human-beings. These ancient philosophers always started imaging about the world and and the moral judgement from thinking about the universality and the essentiality of human-beings.

By contrast, Machiavelli started to argue about political philosophy (Ethics) from the individual subjective interests rather than an objective moral guide line stated by Plato (as Idea) and Augstine (as God), and a metaphysics by Aristotle (as the nature (essentiality) of human-beings and their community) and Aquinas (as Natural law of human-beings and Divine law of God). Machiavelli could be one of the first political philosophers who invented the "moral relativism" which denies the existence of Utopia, the absolute universal value of moral judgement, and the essentiality of human-beings.

In terms of Machiavelli's world view, individual human-beings should act by following their expected merit gained from their action, so by neither the ideal moral guideline nor how human-beings ought to be naturally. The merits mentioned by Machiavelli are security (protection) of individuals, their family, and their significant others, material gain, full-filling desires, admiration to charisma (beauty, masculine power, authority, family-tie, friendship, and something related to self-identity).

Only the objectivity mentioned by Machiavelli was the power of an authority with these merit. The one holding a high level of these merits is the one who control the most. Machiavellian philosophy of measuring these merits is highly subjective and varies across time, place, and occasion. Unlike Platonism and Aristotlean, Machiavellian does not have an universal objective measure to tell what is right and wrong. The judgement highly depends on how human-beings can see and feel at their moment. Thus, Machiavelli is one of the most subjectivist philosophers because there is no objective principle to measure the volume of these merits; only the measure is human-beings' sujective sensation.

Machiavelli regarded the essentiality of human-beings is the instinction that they follow the charisma and the merits they can immediately see. However, unlike Aristotle, he did not mention all the human-beings are naturally same. Machiavelli regarded the quality of human-beings varies across their endowed talent, family, ethnicity, civilisation, and their sovereign they obey. All in all, Machiavelli saw human-beings have a natural instinct to follow the charisma. Nonetheless, Machiavelli seemed to believe in the evolution of human-beings to the next step and the alternative world more than Aristotle did. Unlike Aristotle, Machiavelli aspired to create a new ideal world although it was not strong desire as much as Plato did. Machiavelli seemed to have thought that if the strong and admirable charismatic sovereign could have existed and prevailed in this world, the better alternative world could have existed. However, Machiavellian world view is still based on the assumption that, although human-beings maybe able to create an alternative better world, the instinction of human-beings will not change.

He regarded highly of the existence of a sovereign (monarchy and any other form of political leadership) who ought to possess a high level of these merits. The interesting fact of Machiavellian philosophy is that, although Machiavelli put a high priority on the existence of sovereign and supported the position of sovereign should be inherited, he claimed that the one who becomes a soveign and his/her family has to possess these merits he mentioned. Therefore, he seemed to have criticised and contradicted the existence of the sovereign who lacks all these merits he mentioned. Furthermore, although the position of the sovereign must be inherited, the family of this sovereign has to have an ability to keep the high level of these merits to inherit. Thus, Machiavelli seemed to have used a rhetoric to criticise the existence of monarchy by pretending the existence of monarchy. But, we never know whether Machiavelli was a supporter of monarchism or a critic of monarchism.



Hobbes seemed like to have taken over the philosophy of Machiavellian moral relativism and optimum decision making based on a subjective interest of individuals and a nation, the community. On the top of his emphasis on the moral relativism and need of the powerful authority, Hobbes offered more mathematically and logically structured analyses of political philosophy than Machiavellian. Hobbes regards that there should be moral codes which guide human-beings to establish a stable and cohesive community.

Hobbes was more realist than Machiavelli. Unlike Machiavelli, Hobbes did not believe in the ideal sovereign with a full of the merits Machiavelli mentioned. Although Hobbes admired the power of a charismatic sovereign, he assumed that it is impossible for the sovereign be powerful and charismatic as much as Machiavelli described. The main reason of this difference between Hobbes and Machiavelli is that Hobbes did not believe in the evolution of human nature. Although he insisted that a sovereign should be powerful and charismatic as same as Machiavelli did, he assumed that it is impossible for a sovereign to be always an ideally powerful and charismatic. This is because sovereign is also a human-being, and can be corrupted if there is no rationally coded law guidling people and their sovereign. Machiavelli regarded that a good sovereign makes a good law whereas Hobbes argued a law should select and keep a good sovereign. All in all, Machiavelli seemed to have thought that, although the essential human nature would not change, there would be an non-naturally superior individual who could be a sovereign ruling over the others. By contrast, Hobbes had never believed in any non-natural human-beings at all, and a sovereign is naturally a same human being as same as other individuals.

Instead of the supremacy of a sovereign that Machiavelli insisted on, Hobbes put emphasis on the "legitimacy" of sovereign, and the strictly coded rational law should define the legitimacy of sovereign. Hobbes argued that human-beings need a strictly coded rational law, they should be guided by its legal system. He claimed that the "law" based on rationally (neither superstitiously nor intuitively) constructed codes is the universal moral principle. He argued the rule under this law could actually measure whether human-beings' decisions are morally right or wrong. Hobbes puts emphasis on the obeying "order" rather than charisma. Hobbes did not regard there should be always a perfect charismatic sovereign, whom Machiavelli admired, as long as the stability of humans' community under the law guideline is guaranteed. Unless the sovereign is really useless enough to collapse one enitre civilisation, s/he should reign.

This aspect that Hobbes supported there should be a rationally coded law (legal system) guiding human-beings as a universal principle indicates that Hobbes is more objective than Machiavelli. Machiavelli claimed that action and decision of human-beings are judged in terms of human-beings own feeling, desire, admiration, fear, and all the subjective feelings at any different time, place, and occation. Hobbes agreed with this Machiavelli's point. However, this is not enough to guide human-beings to establish a stabile civilised society which Hobbes considered as necessary for all human-beings. Hobbes strongly required the existence of a strictly coded rule under a rationally constructed legitimate law, and despised superstition and intuitive rules. Machiavellian philosophy still allows either a sovreign or a legal system to be driven superstition and intuition if human-beings and accept to exist. By contrast, Hobbes highlighted that an existence of secular (not superstitious) and rational (not intuitive) law as an objective measure and a universal moral principle.




Both Machiavelli and Hobbes thought a unity of human-beings could be achieved by allowing human-beings' subjective interests to be competing each other, and then the physically strongest, the most charismatic, and the wisest one to win. Both of them thought highly of the natural selection that determines which moral decision is right and wrong when two or several moral decisions exist and decision makers have to decide any one of them. One of the measures of the natural selection is individuals' merit to the others. It indicates those who have more merit than the other shall rule the others.

Although Machiavellism and Hobbesian are authoritarianism as same as Platonism, Machiavellian characteristics is totally opposite from Platonian characterisitics. Plato said the authoritarian heirarchy should be established by following the ideal structure in order to create an ideal world i.e. Utopia so that he claimed that possition of individuals in their cummunity "should be re-shuffled" to re-allocate them owing to their merit accomplishing to establish a Utopia. On the other hand, Machiavelli and Hobbes had never believed in Utopia. Both of them regarded that all individuals' status is "already" given to all individuals owing to the merit distrubuted to each individual by following the natural selection. Machiavelli believed that the natural selection prevails whereas Plato believes the natural selection is not an ideal. In addition, Plato believed there is an absolute universal objective moral guide line whereas Machiavelli and Hobbes regarded that the moral is relative to time, place, and occasion. Furthermore, unlike Aristotle, Machiavelli and Hobbes had never mentioned how human-beings ought to be by nature (Aristotle is more objective than Machiavelli and Hobbes because Aristotle believed there is an objective scale to what human-beings ought to be although his objectivity is not strong as much as Platonian philosophy.

The interesting aspect is that, meanwhile Platonists, the moral universalists, and these two moral relativists (Moral value is a subjective matter and is derived from the human-nature) have an opposite philosophy on the spectrum from each other, both of these opposing groups strongly necessarity and inevitability of the existence of an "absolute authority".


... to be contuned to Part 3:

Political Philosophical Compass (Spectrum) --- Part 1

This is a spectrum allocating major political philosopher (Ethical Philosopher) on according to their thought on the world and the moral judgement.

The vertical axis is the objective v.s. subjective scale which measures whether the moral judgement is based on an objective measure (coming from outside human-beings' emotional feelings and a psychological matter) or the moral judgement is merely a psychological matter so that no absolute objective moral guide line is possible to exist.

The horizontal axis is the non-natural v.s. natural scale which measures whether the alternative better world can be created and the human soul can evolve to become better or the nature of human-beings is permanent and hardly changes.


1. In Antiquity and Medieval:

First of all, the classical example of comparison between political philosophers is the comparison between Plato and Aristotle. There is no doubt to say that the comparative study of philosophy started from Plato v.s. Aristotle, and all the comparative studies of philosophy cannot ignore the debate on Plato v.s. Aristotle. Meanwhile these two philosophers existed in the same time period, one of these two has a totally different ideology from the other.

Plato is the most notable objectivist and non-naturalist in the Western philosophical world. Plato believed there is an ideal community (the utopia) can exist, and existence, morality, and mind-set of human-beings can evolve to be better (by means of how Plato defines what is better and worse). He also claimed that there shuold be a strong, absolute, universal, and permanent moral principle which shall guide human-beings to evolve.

Plato also argued that a supreme (as he defines) group of human-beings should be the leaders who quickly learn and understand the absolute moral principle and overcome from the human nature (evolve from the real state to the ideal state). He also claimed that these leaders should guide the other inferior human-beings, who are difficult to evolve to the ideal state.


By contrast, Aristotle questioned if human-beings are able to find the absolute and permanent moral principle guiding how individual human-beings should be. Aristotle stated that the value of morality varies across the different time periods, places, and cultures. Aristotle also claimed that human-beings is naturally able to guide themselves to the optimum way of living in their community. "Human-beings are naturally social, and political-beings" is his famous quote which denotes that individual human-beings themselves should constantly discuss and evaluathe their moral decision, and then decide what is right and wrong at the current time, place, and occasion.

Aristotle contradicted Plato because Aristotle argued that human's characteristics constantly changes over time, place, and occasion. Therefore, even though some individuals have a strong enthusiastic altruism, ability to guide the other individuals to the principle, and a deligent hardworking spirit, these individuals can be corrupted when they start to hold a power to control over the others. Furthermore, Aristotle also clarified the fact that all the communities in the world have different needs, and all the individual human-beings' opinions have to be represented. Thus, there shuold not be a few number of individuals controlling over the others because there is no absolute measure to define which is better and worse.

Only the universal objective principle Aristotle mentioned was that "human-beings are naturally social". This quote states that, even though the moral value varies across time, place, and occasion, all human-beings in any parts of the world are essentially same. He affirmed that all human-beings must live together. Otherwise, human-beings turn up to become a beast (savage). This is the aspect that Aristotle was one of the first remarkable philosophers who put emphasis on the cosmopolitanism. As all human-beings can nagotiate each other to derive the optimum solution to be united, they can live together with peace and unity.

This philosophy states that the world is constantly changing, and human-beings can be unified when they nagotiate each other. The problem of this philosophy is that it does not clarify how the world changes, and restrict the possibility of new discoveries because humans' perspective to only focus merely on how the things surrouding them are. This problem disrupts human-beings discovering and inovating new things and thoughts and beciming sceptical about how the real world is formed. Furthermore, human-beings from the different culture may bring further conflict rather than unity. When both parties are considered equally right and wrong, they may never compromise their own wants and tolerate any negative feeling (E.g hatred, stereotpy, mis-understanding, and biological and emotional sense) about the others. Thomas Aquinas, who adapted Aristotle philosophy into the primative Christianity to reform Christianity be more familiar to the commoners, stated, on the top of the human-naturality, there is a God's divinity as the "unmovable mover" which is the principle, denoted by Aristotle, which is only a universal natural law but too abstract to define. Aqunas's philosophy developed Aristotalian philosophy to be more clear and judgemental. However, Aqunas's philosophy still restricted the possibility of descovery and inovation.

At this point, Platonian philosophy has a stronger advantage because Plato put emphasis on need of the absolute objective judgmental tool measuring which individual human-beings are right and wrong.

However, these classical philosophers had never answered to find whether or not it is possible to find an objective moral measure and principle within the human-nature. Plato and Augustine, the founder of Platonistic Christianity, definted an objective moral guideline is not able to be measured by natural human-beings so that it should be created by a non-natural supreme-being such as an idea or a God. On the other hand, Aristotle and Aquinas remained the political philosophy (ethics) to be very limitted on the world we can see now so that there is no place for deduction which forecasts the past and the future. Platonist focuses on the unreal world whereas Aristotlean only focuses on "now". Both philosophy lack the consistent and dynamic analysis of how humans and their community can change.

In addition, there is a question by some of the modern philosphers which asks whether or not it is possible expect human-beings to be virturous enough to keep themselves ethical and unified constantly. These modern philosophers criticised that both Plato and Aristotle were too optimistic about human-beings, and so contradicted there cannot be any universal objective moral (ethical) guide line like what both Plato's Idea (Augstine's God) and Aristotle's Social and Political Human-beings (Aquinas's Divine Law).

... to be contuned to Part 2:

Empirical evidence prooving Liquidity-trap: Lower interest rate does not stimulate economy

Why is the economic recovery not stimulated even though the central banks offer the sizably low interest rate which is close to zero? Many people imagine that if the interest rate is low, the economy should be stimulated. The reason is that the cost for companies paying the interest rate of their debt and for entrepreneurs planning to borrow money to start their new business is low.

However, this is only the microeconomic factor, which is a static analysis focusing on the individual economic agent's performance, and does not take account of the time effect and the environment interacting with this agent's performance. This means it ignores the macroeconomic factor which is the dynamic analysis taking account of the future expectation and the wide scale economic environment.

The problem is that, even though the interest rate, the cost of borrowing, is low, if the expected return from investing to economy is low, banks and the other forms of financial institutions are reluctant to lend their money. In addition, the entrepreneurs are discouraged from borrowing money to invest to their business if the future expectation is not good for their business due to the current economic environment.

This phenomenon is called the "liquidity-trap" which was originally mentioned by Professor John Maynard Keynes. During the world economic depression in 1929, many economists thought the economy would be eventually recovered if the central bank tried to increase the liquidity of money supplied by lowering the cost of borrowing money. However, this expectation did not happen. Keynes analysed this problem by explaining the liquidity of money was stuck in their flow due to the lack of confidence in investment. Keynes also put emphasis on need of the price inflation to increase the investment volume. If the price inflation is taking place, the real value of the money borrowed at a certain past time period goes down, and the nominal value of the revenue gained at each time period keeps increasing (the real value of the revenue is kept almost constant). By contrast, if the price deflation (i.e. the "minus" inflation) occurs, the financial economic situation is the opposite effect of the inflationary period.


This project assessed whether positive or negative the correlation between the interest rate and the investment share of GDP. London Interbank Offered Rate has been newly introduced by the IMF, WEO Database, Country Data recently so this newly introduced variable was used as the variable representing the interest rate. Although, there are only the US and Japanese one for London Interbank Offered Rate, the USA and Japan are the best candidate countries to assess the effect of the liquidity trap because they are experiencing now! In addition this variable is a very useful indicator of the interest rate effect on economy because this interest rate index takes account of the various money transactions between various banks and the other forms of financial institutions.

* "London Interbank Offered Rate" is denoted as "the interest rate" and "the nominal interest rate" in this project.

* There are two indicators of the investment share of GDP. One is "the percentage investment share of GDP times the (natural) log of GDP", and another is "the (natural) log of the GDP times the percentage investment share of GDP"

* All the logalisms used in this project is the natural log.

* These OLS regression analyses are based on the fixed effect model which involves the dummy variables (the binary variable) for the different units (countries).

* The variable called "Time" denotes the time trend whose valometer increases as the time passes.

First of all, the simple Ordinary Least Squares (OLS) regression analysis was run. The investment share of GDP is regressed on the logged interest rate. The result offered is shown in the figure below:


This OLS regression is the percentage investment share of GDP times the (natural) log of GDP:




This OLS regression is the (natural) log of the GDP times the percentage investment share of GDP:



These results show that the positive correlation between The investment share of GDP and the interest rate. It is really disappointing for those who trust the monetary policy of both the current US Federal Reserve Bank and Bank of Japan. It is also surprising for many microeconomic financial analysts because it indicates that the business grows when the cost of borrowing and the interest payment on company-debt is high. This contradicts the basic static ( = nominal) cost and benefit analysis. Thus, these results affirm that we certainly need a complex dynamic ( = real ) cost and benefit analysis.

Is it logical to say that "We should rather increase the interest rate to recover our economy?" No, this is not logical. It is not logical to say "Higher the cost for companies and entrepreneurs is, higher the confidence of consumption and investment is".

This aspect suspects that the interest rate is not exogenous (the condition to be a good explanatory variable not being controlled by any other factors (variables)) so that it can be endogenous (controlled by some other factors. This situation leads the analysis inconsistent if this endogenous variable is used as an explanatory variable).

There is an international financial economic theory stating that the interest rate is given by the exogenous factor we are hardly able to control rather than we give the interest rate to control the economic situation. This theory suggests that the interest rate is set according the price inflation rate to make the real interest rate (the nominal interest rate minus the price inflation rate) to as zero as possible. Therefore, this theory rejects the classical and the monetarist theory of the interest rate which states that the low interest rate lowers the cost for the entrepreneurs i.e. stimulating the economy. This theory claims that the interest rate is an indicator of the price inflation. It means that, when the interest rate is high, the expected rate of the price inflation, which increases the business opportunities, is high.

* This is the theory in the developed economies where the hyper-inflation risk caused by the mal-fiscal functioning tends to be low.

All in all, there is a room to assume that the inflation rate stimulates the investment share of the GDP. Therefore, it tested if the logged investment share of GDP is positively correlated with both the interest rate and the logged price inflation rate (In the later texts, the price inflation rate is written as the inflation) as follows:


-

-


This proves that the inflation is positively correlated with the investment share of GDP. However, there is a concern that the interest rate and the inflation are correlated each other. If the explanatory variables in one OLS regression are correlated each other, it tends to disturb the OLS analysis result.

So, it suggests to assess the endogeneity of the explanatory variable. By following Keynes' theory and the theory claiming the interest rate is given, the interest rate is assumed to be positively correlated to the inflation. This inference also claims that the Two Stage Least Square (TSLS) regression analysis, instead of the OLS, to regress the investment share of GDP. The first stage regression, which is called the "auxiliary regression", to regress the interest rate, the candidate explanatory variable of the investment share of GDP, on the inflation, the instrument variable of the interest rate, the explanatory variable.

The other reason why the inflation is wanted to be used as an instrument variable and the interest rate is wanted to be used as an instrumented explanatory variable is that this project attempted to explain the whole mechanism explained by the theory and assess if this theory actually proves the real world economic situation. Because it assumes that the interest rate is highly controlled by the inflation. Therefore, the inflation had to be used as an instrument variables so that it cannot be used as one of the explanatory variables.


-


These results proved that the inflation is positively correlated with the interest rate as the theories suggest.

The fitted value of the interest rate instrumented by the inflation rate (and Time if necessary) was saved to use for the second stage regression, which is the primary regression of the TSLS analysis.

There are two analyses because "the percentage investment share of GDP times the (natural) log of GDP" and "the (natural) log of the GDP times the percentage investment share of GDP" are assessed a little bit differently. The former one was regressed on the interest rate instrumented by both the inflation rate and the Time meanwhile the latter one was regressed on the interest rate instrumented by the inflation rate only.

Both kinds of regression analyses are based on the non-linear model because there is assumed to be the optimum interest rate affected by the optimum inflation rate which maximise the investment share of GDP. The positive but reasonable rate of the inflation is a indication of the circulation of economic activities running well and the economy is expanding not too fast. However, the positive and high inflation rate decreases the real value of individual economic agents' income, and discourages saving, the source of financial economy, and supply of the investment available (The net present value of the amount of money invested declines over time). In addition, as the (nominal) interest rate is determined by the inflation rate (in order to set the real interest rate (the interest rate minus the inflation)). Therefore, in order to find the optimum inflation rate and then the optimum interest rate (= The intercept + Coeff. x "The inflation" + error) are required to find out!


The regressions below are "the percentage investment share of GDP times the (natural) log of GDP" on the interest rate instrumented by the inflation and the time trend:


-


According to the three criteria (denoting the smaller number shown by each criterion implies the better model), the regression above without including the time trend as one of the explanatory variables is a better model than the other with the time trend as one of the explanatory variables. This reason would be because the time trend is already included in the instrument variable of the interest rate.

The other sorts of models with various kinds of formulae, such as the liner model ( I = a + b x R + error) and the cubic formula ( I a + b_1 x R + b_2 R^2 + b_3^3 + error ), are regressed. Nonetheless, the square formula (The second degree formula) came up as the best model to demonstrate the correlation between the investment rate times the GDP. By observing the both models above, both formulae has the global maximum value. Therefore, this result indicates that the optimum interest rate instrumented by the inflation rate exists.

The figure below contains the matrix graph (the top one) showing what the interest rate given by the inflation and the year is, and the other (the bottom one) showing what "the percentage investment share of GDP times the (natural) log of GDP" given by the interest rate instrumented by the inflation and the time trend is:



These graphs indicate the following phenomena:

# The real interest rate (the gab between the interest rate and the inflation rate) tends to be minimised as the year (Time) passes.
(This could be considered because of the global financial liberalisation which has increased the degree of competitiveness of the global financial market. )

# The optimum interest to stimulate the economic activity is between 1.77 and 2.14.

# In 1980 (and possibly before), the high inflation is discouraged the economic activity level more than the low inflation.

# In 1990 and after, the lower inflation discourages the economic activity level far more than the high inflation.


The regression below assessed "the (natural) log of the GDP times the percentage investment share of GDP" with the same method as "the percentage investment share of GDP times the (natural) log of GDP" assessed in the previous regressions.



For "the (natural) log of the GDP times the percentage investment share of GDP", the interest rate is only instrumented by the inflation because this model needed to include the time trend as one of the explanatory variables. This reason is because the dependent variable "the (natural) log of the GDP times the percentage investment share of GDP" is increasing over time so that the regression model had to involve the explanatory variable explaining this factor. It also had to exclude the time trend from the instrument variable of the interest rate in order to avoid including one same variable for two different indicators.

The figure below contains the matrix graph (the top one) showing what the interest rate given by the inflation and the year is, and the other (the bottom one) showing what "the (natural) log of the GDP times the percentage investment share of GDP" given by the time trend (Exogenous) and the interest rate instrumented by the inflation is:



These graphs indicate the following phenomena:

# The optimum inflation rate stimulating the economic activity is 2.48, and the optimum interest rate is 1.5 then.

# Lower the interest rate is implies lower the economic activity level is.



Having observed these results given by the regression analysis (based on the fixed effect model), the sizably low interest rate is less likely to increase the liquidity of the money supply flowing into economy. As Prof. Keynes suggested, the USA and Japan may need to expect the exogenous shock in their economy, such as technological growth and finding a new natural resource and/or a brand new invention, and/or the strong positive planning policy intervention other than the monetary policy.

All in all, the policy makers cannot merely control the interest rate to expect the economic recovery. Hence, the current US and Japanese monetary policy seems to be very unreliable to stimulate the economic recovery.