Cost and Benefit Analysis - Basic simulation with SymPy - Econometrics with Python Programming

Cost and Benefit Analysis - Basic simulation with SymPy - Econometrics with Python Programming

 

Low-tech firms should rather adopt the public cloud!

Many small and medium companies as well as public institutes of the local authorities tend to be reluctant to adopt an advanced information technological (IT) apparatus such as the public cloud service due to their cost concern as well as their conservative characteristics. They tend to assume that they will not take an advantage of the large scale of economies offered by the public cloud service. However, these firms are actually those which will take a considerably high benefit of using the public cloud service. It is explained with the example of using Amazon Web Service (AWS).

 

The first issue is the version update including the cyber security. The average cost of the version update is heavier for smaller firms so that it is actually more cost efficient to rely on one unified provider. AWS updates their versions of the physical machines as well as the cyber security measures adapted to the latest requirements for the most recent environment for their entire global network. Furthermore, some of the security package, such as AWS Shield, come as the standard package.

 

The second issue is the maintenance of the physical apparatus in their on-premises environment. These small companies and relatively IT illiterate local authorities tend to often neglect properly looking after their on-premises environment and maintaining its durability. Moreover, they tend to be more prone to natural disasters striking their place. All in all, they had rather better locate their electrical data while implementing their cross regional redundancy of the entire database in case of a disaster and a cyber security threat.

 

Regarding their data management, AWS offers various types of database (DB) depending on conditions and usages. Amazon Dynamo DB handles non-structured data with a large volume so that electrifying the information is flexible to query and store. Amazon Aurora is autoscalable across the multi-regions so that the data redundancy is guaranteed in case of various disasters and the access overflow undermining the data-handling capability.

 

If they are worried about moving their data at once, AWS offers the data migration services such as AWS Snowball and AWS Snowmobile (called AWS Snow-family overall). These offer the option of outsourcing the entire data migration from their on-premises to AWS server network. Perhaps, these small and medium companies as well as the local authorities had better migrate the entire data and maybe the entire IT configuration to the public cloud in order to cut their expenditure for their IT staff as well as their physical space and apparatus.

 

There are still many individuals worried about the privacy and the countermeasure against the data leakage. Nevertheless, storing data in their nondurable vulnerable on-premises environment seems to be far riskier than outsourcing the database and the storage to the public cloud vendor. In addition, the scalablity and the redundancy across the regions enable to flexibly link and query the data across various places at any time available. Therefore, it is also expected to improve their administrative efficiency too.

 

My own AWS configuration architectural map

 

Book Recommendation: Natural Law Liberalism

 First of all, before introducing the book, it is important to know the brief introduction of the disputed types of Liberalism. The brief birth story of Liberalism in the modern era is needed. The two mainstreams of Liberalism are roughly explained as follows.

Liberalism is a political philosophy claiming for liberty of autonomous individuals emancipated from authoritarian oppression with their naturally endowed right and equality of obtaining it. It distinguishes liberty from a simple freedom as it claims for some degree of restriction on one’s freedom of doing whatever s/he wants on a temporary basis. It insists providing individuals with a broader meaning of freedom in a permanent basis as well as the social public environment and its minimum required rule securing all the individuals to accomplish it.

Although it is often believed that Liberalism emerged in the early modern age, the base concept was already emphasised by Aristotle (The ancient Greek) and Thomas Aquinas (The medieval European) at the pre-modern time period. Both Aristotle and Aquinas expressed humans as autonomous individuals who should be free to act and think with their own freewill. Thomas Hobbes and John Locke claimed for Liberty as the universal naturally endowed to complete the overall picture of the characteristics of Liberalism in the beginning of the modernity

The first mainstream of Liberalism in the modern world politics formed its characteristic identity by adopting the utilitarianism asserting to maximise the sum of pleasures while minimising the sum of pains by letting individuals to act freely with their constitutional right under the mutual social agreement. This is also related to economic freedom encouraging the market competition guaranteeing the equality of opportunity for individuals to join to be rewarded by means of their contribution merit. This is the Liberalism encouraging the overall liberty in a comprehensive meaning so that it is introduced as Comprehensive Liberalism.

On the other hand, there is the second mainstream of Liberalism challenging the aforementioned Liberalism where liberty is limited to the constitutional and metaphysical level. This new branch of Liberalism attempt to modify the older version of Liberalism to the newer alternative more applicable to the political intention of accomplishing the liberalist ideal ethics.

This second mainstream of Liberalism insisting on providing individuals with their right of the comprehensive freedom but also an impartial spectator intervening resource distribution, social justice mediation, and rehabilitating the handicapped minorities. The most notable figure is John Rawls having introduced the political theory called Political Liberalism claiming for more proactive interventions rather than the conventional laissez-faire (little or no intervention policy).

The provision of liberty requires the daily political level intervention to individuals more than guaranteeing their right under the constitution or the customary agreement. There is the veil of ignorance penalising some individuals lacking the necessary information before acting freely. In order to accomplish the equality of opportunity under a fair competition, it requires a certain degree of the redistribution of resources to enable all the individuals to become competent and able. The minority individuals are often marginalised under the laissez-faire majority rules so that it requires the culturally and religiously intermediate pluralist intervention into it. It thus requires the proactive intervention by this impartial spectator is thus necessary to mitigate these obstacles causing unfairness.

Nevertheless, there is a counterargument being sceptical about these modern types of Liberalism whose political methods are controversial enough to judge whether or not they can encourage individuals’ liberty. The book introduced here indicates one of the counterarguments. 

This book “Natural Law Liberalism” is highly recommended to read to understand the characteristics and their transformation of various derivations of Liberalism in the modern world. The author of this book manifestos his own version of Liberalism challenging against the two mainstream versions of the modern Liberalism.

His own manifesting political philosophy is explained in the last one third of this book whilst the first two thirds of this book is about introducing what versions of Liberalism exist. It mostly covers the historical evolution of Liberalism having produced various derivations from the pre-modern periods including the ancient Greece and the medieval Europe to the modern time period. Therefore, this book is actually useful as a textbook of understanding the evolution of Liberalism.

This book puts strong emphasis on the sceptic perspective on the modern types of Liberalism by criticising them with reference to his manifesting alternative. However, even though its main intention is criticising it, it well-summarises the characteristics of both Utilitarian Comprehensive Liberalism and Rawlsian Political Liberalism while explaining how either of them has become popular in the political arena nowadays. Thus, this book is recommended to study it at a fast pace because of its objectively well-summarised description.

The counterargument against Rawlsian Political Liberalism is based on the scepticism about the impartial spectator as a mediator of social justice and also about its moral neutrality. This public institute as an impartial spectator promoting the pluralism of cultural, ethnic, and moral diversity is still prone to the bias manipulated by the powerful influential cohort of this political arena. The objectivity and plurality can therefore also be under the threat of political lobbying.

This book highlights the criticism on both Comprehensive Liberalism neglecting to install the core moral principle and Rawlsian Political Liberalism overestimating the neutrality of the secular (believed to be morally neutral) interventionist social reform. Instead, it suggests Liberalism to focus on the inevitable influence by the majority mainstream and the longevitive tradition to policy making and societal environments. For example, the history of religious influence over social norms and values is significantly longer than the history of the modern secular politics.

The author of this book is a stronger supporter of the metaphysical and ethical philosophy of Natural Law most notably defined by Aristotle and Thomas Aquinas. Both Aristotle and Aquinas expected for human individuals as naturally social so that their spontaneously formed social order is sufficient enough to encourage both stability and fairness.

The Natural Law theory by Aristotle and Aquinas describes the error correction mechanism called an unmovable mover which indicates the unchangeable virtue even in necessary multiple drastic social transformations. All in all, while individuals and their society may constantly change to adapt individuals and their society to each new environment with new challenges within the minimum necessary restriction imposed by the unchangeable virtuous guideline.

The seemingly most essential point of this book is underlining the importance of a strong sense of morality of all the individuals and their community functionally cohabiting together in a society. An authoritarian state does not require a strong morality of its individual citizens under a cohesive stability. By contrast, a state with less or no authoritarianism requires individuals being moral enough to enable them to voluntarily comply with the spontaneous order stabilising their state.

Overall, regardless of political opinions and perspectives, this book is highly recommendable to understand characteristics and challenges of the various versions of Liberalism in history. Also, it explains that Natural Law, the metaphysical and ethical philosophy, is compatible with Liberalism in practice for the current daily politics. This attempts to explain that Aristotle and Aquinas are ones of the remarkable Liberalist political thinkers. Even though it is not agreeable, it is thought provoking enough to get interested in Liberalism and its historical footprints.

Social Democracy is not exactly equal to Socialism

 

The terminologies of political ideologies are really complex to explain as well as indeed maniac for most people unless they are keen to study political science. In particular, when it comes to define Socialism, the definition varies across interpreters. Moreover, Social Democracy does not exactly imply Socialism whereas Democratic Socialism implies Socialism for certain.

 

The definition of Socialism involves a wide range of policy-implementations in terms of both economic and social scales. Generally, Socialism means to proactively take the external influences of policies on society (taking an account of the group of individuals, their interactions, and the external environment where they cohabit together in) into consideration. The fundamental problem of Socialism is the subjective interpretation of what are good for society so that its interpretation often depends on each interpreter implementing Socialist policies.

 

Focusing on the economic policies, Socialism is often used as the synonym of the collective/command economy based on the cohesive planning ahead as opposed to the market economy based on the laissez-faire planning. The market economy allows each individual economic agent to decide while trading their goods and services where it relies on the spontaneously driven distribution order. By contrast, Socialists insist on planning of, or intervention to at least, economy to induce their desired outcome. There tends to be a paternalistic institute, which can be either government or commune, instructing each individual and their firms with reference to their Socialist planning.

 

The types of Socialism are unique from each other depending on the instrument of implementing their policies interpret as producing good outcomes for society. Their uniqueness is more obvious in the social-policy scale than the economic-policy scale of political science. The orthodox Marxism in particular puts emphasis on the revolutionary government by the proletariat autocracy commanded by the chosen elites selected from the proletariat citizens who are supposed to be excel at knowing what are the best for their society are. Anarch-Syndicalism relies on the community of individuals who are voluntarily gathered into it from any social background to negotiate and decide their policies to implement. Democratic Socialism stands between these two policies as it allows the open political decision-making processes while it weighs on the responsibility of the chosen represents by non-random selection.

 

The confusion is that Democratic Socialism and Social Democracy are not technically equal to each other. Democratic Socialism prioritises the paternalistic planning/intervention into individuals' life and their living environment (i.e. society) while encouraging the minimum required open decision-making processes. Social Democracy still takes policy-impacts on society into consideration to the certain extend. However, it defies the paternalistic collective order and responsibility imposed by Socialism restricting each individual's freedom of choice and voluntary will.

 

In terms of the social-policy scale, the difference between Democratic Socialism and Social Democracy is slight because both support the open decision-making process conducted by the representatives elected by the citizens as well as the certain degree of political freedom for individuals unless threatening the system stability. On the other hand, in terms of the economic-policy scale, their difference is obvious. Social Democracy embraces the market economy with the optimum level of the intervention required for solving their social issues of concern whereas it avoids being the perfectionist paternalism suppressing both economic efficiency and individuals' own freedom of choice.

 

Social Democracy is actually the derivation of Liberalism encouraging each individual's own voluntary actions and free will instead of collectively intervening into them. Social Democracy is relatively more friendly to Socialism than the other types of Liberalism. It trusts in the invisible hand spontaneously adjusting the socioeconomic environment by letting individuals and their interactions be free. This is the critically unique point distinguishing it from Democratic Socialism supporting much stronger interventions into individuals and their interactions for their perfectionist objective.

 

Sum up, the word order makes a distinctive contrast between those two policies: Socialism and Social Democracy. They are neither exactly different nor same. It may be insignificant in our daily life and journalism meanwhile its difference is significant in political science. Hence, it is important to take enough attention to quote this kind of terminologies.

 

The alternative required for replacing the current dysfunctional world socioeconomics

The current entire world is a full of mess. This should be no longer called the functional order.  This is the disorder perpetuating various social diseases and social exclusion of majority individuals.  In terms of economic, political, and sociological perspectives, this world socioeconomic situation is undoubtedly dysfunctional enough to need an alternative replacing the current socioeconomic structure. Please kindly read the linked articles:

Economic issues:

Domination by Corporatism,The New Totalitarian

http://art-blue-liberalism.blogspot.com/2017/04/domination-by-corporatismthe-new.html

Monopoly of Corporatism Expands in Present Day Capitalism: Average Cost shifts Rightward

http://art-blue-liberalism.blogspot.com/2018/03/monopoly-of-corporatism-expands-in.html 

Let's be sceptical about Corporate Capitalism!

http://art-blue-liberalism.blogspot.com/2022/06/lets-revolt-against-corporate-capitalism.html

The current market economy is monopolised by the elite corporate tycoons. Even though the status-quo claims for the equality of opportunity to compete under meritocratic ethics, the income distribution mechanism has already become too asymmetric to merely rely on the labour market competition. Therefore, some degree of the equality of outcome for all the individual is required to accomplish the equality of opportunity more than ever.

Political issues:

Democracy of the modern world under challenge

http://art-blue-liberalism.blogspot.com/2022/07/democracy-of-modern-world-under.html

The Good Communism: Anarch-Syndicalism

http://art-blue-liberalism.blogspot.com/2022/07/the-good-communism-anarch-syndicalism.html

The Japanese Anarchist Communism

http://art-blue-liberalism.blogspot.com/2022/07/the-japanese-anarchist-communism.html

Crypto currencies based on the Block-chain technology e.g., BItcoin and the P2P networking are like Stirnerism in economy and finance!
http://art-blue-liberalism.blogspot.com/2022/06/crypto-currencies-based-on-block-chain.html

 

The decision making process is centralised more than ever. The nation state government no longer deserve their individual citizens. Not only the authoritarian political structure but also the counterpart called the Liberal-Democracy put priority on the interests of the few number of the politically powerful peers not allowing to reflect the opinion of the majority individuals.  By referring to the P2P (Peer To Peer) system, it might be far more effective to install the spontaneous order based on the multiple interactions of individuals without any centralised structure. The spirit of the participation will encourage these autonomous individuals to voluntarily improve their living standard by taking advantage of the remarkably developed information technology. 

Social issues:

Suicide and Community

http://art-blue-liberalism.blogspot.com/2021/11/suicide-and-community.html

Tolerating Uselessness

http://art-blue-liberalism.blogspot.com/2022/05/tolerating-uselessness.html

Manifesto Spiritual Libertarian - the Libertarian for the coming age of Ying 陰

http://art-blue-liberalism.blogspot.com/2022/06/manifesto-spiritual-libertarian.html

The polarisation between the ruling class and the useless class rises in the society of the entire world. Those who are not "conforming" of producing the enough productivity fulfilling the interests of the ruling class are often socially excluded. As the factors of production demand individuals with conforming skills and talents more and more, more individuals tend to be labelled as "useless". so that their meaning of living is taken away and eventually falling into the state of the Anomie (normlessness). It is the time to rebel against the fixed norms and values imposed by the ruling class to emancipate individuals and their spirit to imagine and eventually form the new alternative liberating the autonomous individuals!

Is Monetarism/Neoliberalism bad? Not at all!

Neoliberalism and its mainstream macroeconomic theory Monetarism are not bad theories like these old-fashioned Socialist and the other Left-wingers condemn at all! These theories teach very important socioeconomic lessons for all the individuals to live as long as the monetary economy where individuals use fiat-money for their intermediary of exchange in their daily life thrives to exist. 

Those who are against Neoliberalism tend to blame these theories as the severe survivalist Capitalist political theories leading the majority individuals to deprivation. However, it is the same nonsense as blaming Marxism and the other socialist theories for the disastrous mistakes of the United Soviet Socialist Republic (USSR). Both Marxism and Neoliberalism contain the non-negligible elements to study the political affairs and the human history. 

- The monetary policy channel instead of the fiscal policy

Focusing on Monetarism as he major base macroeconomic policy of Neoliberalism, the key element of this theory is analysing the nature of the fiat-money flowing into economy as the intermediary of exchange. In the long run, the money value is neutral to the other substances distributed in the world. By contrast, it regards that the change in the money supply volume affects the economic activities and productivity level in the short-medium run. 

Monetarism regards highly of the value of the fiat-money supplied by the central bank which should be supported by its credibility and its market demand. Therefore, it is sensitive to adjust the money supply level to the aggregate production level of this economy in order to avoid the value depreciation. 

It encourages the private sector based economy functioned by the spontaneous order of individual economic agents voluntarily deciding the aggregate production volume according to their needs and wants on spot. It discourages the excess reliance on the fiscal policy cutting tax and increasing the government expenditure while incurring national debts leaving their responsibility of repayment with the inevitably increasing future taxation and cutting the future government expenditure in the long run. Instead, it tackles with the temporary economic downturn by temporary pumping the extra money supply filling the temporary emerging negative output gap. 

- High-Powered Money as the antidote against the deflationary recession

In order to enable the fiat-money to stimulate economy, the velocity power of this money supply which is its value and credibility in both domestic and international market, is required. When individual economic agents appreciate its value and credibility, they find its extra supply as valuable and trustable to use as their intermediary of exchange in both domestic and international market. They may either spend for their exchange or save in their banks using the extra money from their saving account as the extra investment resource for increasing their profit. This is called High-Powered Money theory. 

According to Monetarism, the deflation inducing the recession, the negative output gap, is caused by an error of scaling the optimum market aggregate production level or a false information delivered to economic agents. Thus, the deflationary recession is caused by the stuck money circulation which means the money supply level is not balanced with the aggregate productivity level. In this scenario, the money supply as the High-Powered Money can be increased to directly inject it to economy to equalise it to match with the aggregate productivity level. 

- Killing inflation is more important!

On the other hand, Monetarism regards of Stagflation (the output stagnation + the price inflation) as the excess money supply unmatching with the aggregate productivity level.  Then, the decreasing output caused by Stagflation is considered as the long-term phenomenon which should be solved by cutting the cots including wages of the production even if it means to discourage their business activity level at least for a short run.

The reason to sacrifice the output to suppress the inflation is to maintain the money value as useful to be implemented as the High-Powered Money. Even to protect the employment by maintaining the wage distribution, the real value of their wage/income is consequently reduced when the price inflation, the money value depreciation, is perpetuated. Monetarism is actually a humanitarian political theory against depreciating their income/wage level to avoid consequently treating these employees as the quasi-slave labour. 

Monetarism antagonises the perpetuated inflation even for diverting the negative output gap is bad for economy overall. Even though the extra money supply is injected into the real good and service market to push the output level up, the value depreciation negatively affects the capital market. 

Most of the capital asset value is based on the base money so that the money value depreciation implies the capital asset value depreciation in the international financial market. Almost all the firms producing goods and services are invested by banks and shareholders through the capital market.

In addition, firms in the good and service market also face the import cost up under Stagflation as the excess money supply perpetuating Stagflation. Because all the regions of this world are interdependent on each other so that the relative value decline of the fiat-money used in one regional economy causes the purchasing power depreciation of this regional economy. 

- Monetarist, Consequentialist Ethical Philosophy

Overall, Monetarism supports the gradual and natural economic recovery encouraged by private individuals and firms under the stable market economy propped up by the balanced money supply adjusted to the aggregate productivity level. This ethical policy is what Neoliberalism shares with and aspires to achieve so that Monetarism is the core macroeconomic policy of Neoliberalism.

Monetarism and Neoliberalism are often regarded with a bitter cold attitude towards those suffering from economic downturns by these antagonists. However, it is really a prejudice to accuse them as such because these theories take account of the majority individual citizens such as their about preventing their real income depreciation caused by the monetary value depreciation.

Monetarism and Neoliberalism may be categorised into the Consequentialist ethical philosophy which attempts to maximise the overall net benefits by maximising the sum of the gross benefits while minimising the sum of the various cots as a total at the end. Monetarism criticises the big government policy directly caring their citizens by incurring a massive debt and the non-stoppable inflation depreciating their income and the market value of financial assets in the international market. Monetarism counts on the rationality of each individual's free will and the spontaneous order based on these free wills to recover their economy with the minimum assistance by the small government. 

It does not mean that both Monetarism and Neoliberalism neglect the public support with government assistances. They simply suggest the minimum required assistances. Furthermore, the High-Powered Money of Monetarism maintains the real value of the assistances provided by government and the procurement power of this government gathering the resources for their provision. This is why the European countries implementing Social Democratic socioeconomic policies adopt Monetarism for their core macroeconomic policy.

- Monetarism in Europe

The weight on each different macroeconomic theory which Neoliberalists adopt to follow depends on each Neoliberalist. Some of them mildly adopt Keynesian theory meanwhile the devote Neoliberalists base their thoughts and plans purely on Monetarism. As a matter of fact, the European Central Bank (ECB) and the central banks of Scandinavian countries, whose countries are famous for their Social Democratic socioeconomic policy, follow the monetarist macroeconomic policies especially for their tight prudent money supply policy. This proves that Monetarism is worth referring to not only the economic Right-wing but also the relatively more centralist counterparts. 

Social Democracy is actually the friendly version of Liberal Democracy (Capitalism) (※) and not technically Socialism. Therefore, it makes sense that these Social Democratic European countries are happy to install Monetarism as the principle macroeconomic theory of handling their market economy. Their socially minded intervention is not stimulated by the proactive positive macroeconomic intervention by a central government expenditure or the extravagant money supply from a liberal central bank which Keynesian economic theory often uses. 

    ※ Liberal Democracy and Liberalism by means of this comparison are treated as the synonym of Capitalism, the market economy, because Neoliberalism is mentioned to explain in this essay. Liberal Democracy is therefore the synonym of Neoliberalism here. Then, Social Democracy is the derivation of Neoliberalism rather than Socialism. 

The level of tax and expenditure rarely changes flexibly unlike those adopting Keynesian theory as their core principle macroeconomic policy. Their costs for the socially minded public intervention of these European countries are covered by the tax revenue from the progressive taxation levied on individuals and firms their steadily growing market economy. These European countries especially since 1997 (The European Monetary Union conducted by the ECB was introduced then) have been actually reluctant to artificially stimulate their economy.

It is because their macroeconomic tradition, especially of Germanic and Nordic, puts high priority on prudence over expansion. Their Social Democracy sustains the diverse income distribution allowing the slow but steady human capital development. Therefore, Monetarism matches with their prudent attitude towards economy to slowly but steadily raising their economy backed up by the human capital development requiring the steady continuous public investment in the long run.

- Conclusion: Monetarism and Neoliberalism are good!

In conclusion, having re-evaluated Monetarism and its ethics basing Neoliberalism, it is actually an ethically good functional socioeconomic political philosophy. Their characteristic is simply different and unique from the other political economic theories.  Their quality depends on how, where, and when it is implemented in real.

    To my admiring economists, Irving Fisher and Milton Friedman

Let's be sceptical about Corporate Capitalism!

 

The current world socio-economic situation can be expressed by the quote of Friedrich Nietzsche "God is dead." as the invisible hand of God explained by Adam Smith no longer corrects the distribution flow of labour and capital in the spontaneous order of the laissez-faire market. The gravestone of its death is created out of the current gigantic economies of scale for the majority of existing industries. Moreover, the courage of individual economic agents is undermined in front of the staunch fortress fortified with allows and spikes of high skill-set requirements and the massive wall of the barriers to the market entrant imposed by bureaucracy and regulations protecting the corporate tycoons dominating their strong hold. 

The current form of the market economy is oligopolistic where a few numbers of elite oligarchies secure their dominance. This is because that they can take an advantage of their huge economies of scale basing their factors of production which enables them to drastically expand their quantity and brand name of their products superior to those smaller rivals. Although their offering goods and services with their high quality and fast speed are beneficial for the majority individuals to enjoy, the market entry for any new entrant to compete with these already established corporations has become significantly more discouraged than the past. In another word, the world socio-economy basing these individuals' life is then more dependent on these corporate oligarchies staying in the market for a long term. 

The social mobility of individuals nowadays is more discouraged than a few decades ago because there is a huge gap between those who are fortunate enough to obtain the skill-sets required by the market and the others not fortunate enough. Each individual's own competence, effort, and motivation are no longer enough to outperform in the current market competition because it requires the significantly higher financial and time costs to secure their competitive advantage than the past. It is not only the matter of material well-beings but also the accessible information available in their living community determine their fortune of acquiring their initiative. Therefore, it requires the public management to offer a certain degree of the equality in outcome to accomplish the equality in opportunity. 

The good old days of the laissez-faire free market capitalism are gone. Instead, the more static socioeconomic political form of the corporate capitalism has come. Rather than the free-minded courageous individual economic agents, the already established aristocrats called corporate shareholders and government bureaucrats secure their dominance. Majority individuals now belong to one big institute of either corporation or government. Even small/medium sized business owners are working under the subcontract with either a bigger corporation or government. The profit share of these corporations is heavily distributed to major shareholders and corporate executives instead of rewarding majority individual workforce members propping up the daily business activities. Therefore, the priority on rewording the merit of individual workforces tends to be undermined under the current socio-economic structure.

It sounds like being a big government advocate by claiming for more positive public interventions. However, its attempt is to avoid the excess centralisation of the capital flows monopolised by corporatist oligarchies and the unfair heavy regulations imposed by government bureaucrats protecting their interest. Without this intervention, the government will become even bigger under the influence of these corporate oligarchies as their political influence is overwhelming the others with relatively less advantages. This should be the intervention to decentralise the whole socio-economic structure to encourage more healthy and fair competitions which the laissez-faire capitalism of the good old days used to promote. 

What the big government advocates such as the orthodox Marxists should be criticised is their excess centralisation of the means of production. Even though they have an originally good will of deserving the majority, it often fails to deserve the majority because this centralised political system put higher priority on deserving those elite bureaucrats at first. This failure of the centralised means of production takes place under the current corporatist capitalism due to its excessively centralised flow of the capital. 

As John Maynard Keynes affirmed, the reform of optimising the balance of private and public sector with the positive intervention to the market with a right harmony is the key to enable the free as well as the fair market economy to survive. Yet, the Keynesian policy also contains the risk of failing into the paternalism by the central government conducting the intervention. Then, it will be necessary to spread the policy decision makings out to much smaller scale such as local authorities and cooperatives. 

The power weight of the public corporations over the private corporation is way more excess than the past. The dominance of the investors/shareholders of these public corporations induces the asymmetric distribution of their profit share which undermines the contribution by the majority individual workforces. The initiative attracting these investors is necessary whilst the distribution weight of the profit share provision is overweighted onto them nowadays. In order to appreciate the contribution by these majority individuals providing the actual workforces, their reward should be derived from not only the labour costs but also some pies from the profit share.

It should also take reviving small and medium sized enterprises into consideration. The oligopoly of the major private banks perpetuates the public corporations' dominance over the private corporations of small and medium sized businesses. This is another reason to shift the economic and political power to the local authority and cooperative which are able to monitor the business performance of their local enterprises as they are located close to each other. Instead of merely relying on the major private banks, rending and legal support from the local authority and cooperative should be more available. The initiative of expanding the decentralised public sector is to encourage more private businesses of not only the big public corporations but also the multiple numbers of the private corporations. 

All in all, it is the time to be sceptical about the big government of the market monopoly! Majority individuals need to capture the power by empowering the decentralised public managements to counter the centralised public body by the puppet government of these corporatist aristocrats. The grass-root political lobbying must take place to capture the socio-economic freedom of majority individuals!!

Stirnerism: The most theoretically completed but the least feasible political philosophy

 

Max Stirner is a political philosopher who invented the idea and the logical construction of individualistic anarchism. This essay comprehensively refers to his political philosophy as Stirnerism. Stirnerism is a unique theory which challenges not only the other non-anarchist political theories but also all the existing anarchist theories. At the same time, Stirnerism seems to be the most theoretically completed but the least feasible political philosophy to implement in real.

In terms of the mainstream political analyses, the establishment of anarchist state falls into either the communism rejecting the private property right and the monetary economy or the survivalist capitalism where none provides the re-distribution of the wealth even when the monopoly oppresses the mass. By means of the feasible policy implementation, it is more likely to end up with resulting in such a state. Stirnerism attempting both protecting the private property right and preventing the wealth monopoly by few.

Stirnerism claims for relinquishing not only the hereditary monarchy and aristocracy but also the nation state itself as well as the entire legal system propping up it. This is the characteristics shared with the other forms of anarchism.  In contrast to other forms of anarchism, Stirnerism distinguishes itself from the contemporary anarchism by insisting on preserving the private property right for each individual and the market economy as a form of their freedom of exchange and choice. It appears each individual's own right to materially deserve her/himself and their own natural desire and own freedom of choice as one of its fundamental principles. Stirnerism regards that the existence of nation state government hinders individual freedom and right instead of protecting them.

 Stirnerism also claims for preventing the monopoly by few hijacking the pure free market economy to protect majority individuals' right to enjoy their freedom and right. In another word, it insists on discouraging another form of government, such as a monopolistic corporation and an organised criminal faction, monopolising both economy and society. This is what John Maynard Keynes thought of with the government positive intervention by reforming its governance instead of abolishing it. By means of economic and social policy, Stirnerism and Keynesian share the similar quality despite their complete characteristic difference. 

To accomplish these Stirnerist attempts, the existence of the cooperative which is sustained by each individual's voluntary contribution to a public administration. The efficient and fair administration of public goods and services will be the key to accomplish Stirnerian deal which is identical to Keynesian policy. Stirnerism replaces nation state government with an alternative operatable form of governance without a nation state, which is the spontaneously established cooperative by the voluntary union of individuals.

This problem which this public sector model based on the cooperative faces is that it requires the high competency level of all individuals participating in its socioeconomics. Like the P2P computer network system, all the participants must have a reasonably high specification level to cooperatively sustain the entire network structure. Each individual must be knowledgeable about the fair judgement and aware of their self-responsibility of contributing to their public goods and services (I.e., the free ride must be prevented with the best effort).  

Instead of one or few authorities commanding the majority to do what they have got to do in their daily life, the majority mass have a lot of responsibilities as an exchange for their freedom and right.  These mass individual must be enlightened enough to look after themselves and be knowledgable and responsible about forming a contract with the other individuals.  In another word, individuals have to be aware of themselves as social beings who are responsible enough to accomplish their social duty as their exchange for living there with their autonomic freedom and right. 

Overall, having taken these issues into consideration, Stirnerism sounds really ideal whilst it also sounds a lot of works to implement in real. More than the other political philosophical theories, it requires almost all individuals participating together to be enlightened enough to understand  and fulfil the required specification necessary for Stirnerian P2P style social contacts.  Perhaps, some future technological advancements may provide individuals with the solution to enable it to be feasible. Hence, it is still challenging to put Stirnerism into practice in real world even though it is still a very attractive as well as interesting theory worth considering for its implementation.

Re-evaluating Charles De Gaulle

 

The first president of the fifth republic of France Charles De Gaulle is indeed a remarkable figure having led France to maintaining her stead economic and political position as an autonomous modern developed nation as well as a key European Union (EU) member state with her significant influence on the entire union. Yet, his policies were often controversial and received some negative feedbacks from various political factions including socialists, those supporting more Anglo-Saxon style free market socioeconomic policies, and the former French colonial states. At the same time, not only French citizens but also EU citizens would not be able to keep having their influence over the world politics without the current French political power having been grown since De Gaulle administration. While France is currently on the verge of determinig her future pathway. 

After enormous fatigues and scars of wars and the loss of French colonies after the World War II (WW2), France has lost her influence and power as a sovereign state in the world. The United State of America (USA) rose up as the newly arising super power together with her strong ideology of liberal democracy and capitalism. At the same time, the United Soviet Socialist Republic (USSR) also strengthened their influence and power over the world politics with their hardcore socialist ideological principle. France selected the alternative of being France as a unique state prevented from becoming a loyal satellite state of neither the USA nor the USSR.  Thus, France needed her own strength of being as independent influential modern state as well as leading the newly formed union of European nations, the EU, in the world politics. Charles De Gaulle thus determined to implement a unique controversial policies attempting to deserve the majority French and EU citizens. 

 

- Controversial interventionist economic policy

Firstly, De Gaulle administration decided to keep the market economy itself whereas it adopted the state's positive intervention to it as well as a high proportion of the state's owned public sector firms. In another word, France selected a pragmatic choice not ideologically being tied to a particular socioeconomic policy like a staunch dogmatic socialism or an Anglo-Saxon style wild capitalism.

There are some negative effects of the contemporary French economic policy. A government may have mistake of judging how the business cycle moves to determine the degree and the characteristics of their intervention. A huge market share of the state ownership of various industrial categories such as manufacturing industries and financial industries hinders a spontaneous economic growth based on the active and fair competition. 

Nevertheless, for the contemporary France, it was inevitable to install such an economic policy to enable French own national brand by protecting it from losing to a competition with their strong competitors such as the USA, Japan. and neighbouring West-Germany. It is equivalent to the development dictatorship adopted to some contemporary emerging developing nations such as Singapore and South Korea. Although France was already a developed Western nation, she was under a constant threat of losing her initiative in the world economy. Therefore, France was required to have a strong intervention lead by one rational public authority gathering a group of educated and experienced elites to conduct her national economic policy planning as same as these emerging developing nations.

 

- Independent Nuclear Research and Development (R&D)

As the contemporary period, those satellite nations of both the USA and the USSR implemented the joint R&D of their nuclear technology with their suzerain either the USA or the USSR. The USA was the first nation invented the nuclear power generation and weapon, and the USSR followed to invent their own ones (although some have argued it could be their self-proclaimed). 

Charles De Gaulle has insisted on proceeding the own nuclear technological R&D led by French government and higher educational institutes because he had predicted that owning France's own nuclear technology will be the key to take the initiative in the world politics. Furthermore, nuclear power generation provides both France and the entire EU with the far more efficient alternative electricity generation to the conventional electric power generations. This initiative has encouraged France to take a lead of the EU as the main supplier of the electricity. 

Regarding this nuclear R&D, there has also been strong negative feedback especially from the anti-nuclear advocates and the former French colonials. De Gaulle administration tested their nuclear bombs in their former colonial lands which hugely disappointed the indigenous citizens there. Moreover, their own R&D with their own effort certainly involved the victims of the radioactive pollution of the nuclear accidents.  There is an inevitably high risk of nuclear contamination permanently harming the health of these individuals while testing and repairing their nuclear apparatus and clearing the radioactive mess. 

On the other hand, in terms of the health hazard risk per electric power generation, with comparison to the conventional fossil fuel based thermal power generation, the nuclear power generation is relatively far less harmful for individuals. For example, the ratio of individuals' health hazard risk per electric power generation is way higher for the counterpart fuelled with fossil fuels. In addition, France would have had to import a massive amount of fossil fuels from abroad which would perpetuate France's dependency on the other nations. 

By contrast, France has prevented herself from being reliant on and easily manipulated by foreign nations after securing her own self-reliant electric power generation source. All in all, even with high financial, environmental, and ethical cost, the benefit paid off for France is substantially higher. In another word, the fundamental political decision of De Gaulle administration accomplished "The greatest sum of pleasures with the lowest sum of pains as the principle of moral and legislation". 

Having observed these examples of De Gaulle administration, the achievements and the assets of De Gaulle administration are undoubtedly remarkable despite controversies.  The EU needs France for various French advantages including the economic and political initiative backed up by her own nuclear technology available to offer for the EU.  Also, France needs the EU membership with a huge initiative to use the EU as her leverage of expanding her economic and political influences as a key member with a high initiative there. De Gaulle administration initially paved this pathway to enable both France and he EU to secure their initiative. Hence. under such a current political havoc, it may be productive to recall and re-evaluate Charles De Gaulle and his achievement.

 

JPY negative interest rate i.e. the inflation tax!

JPY holders are now experiencing the negative real interest rate steadily depreciating our real income, sigh. 

Interest rate r_US > r_Jp. ∴ Money Demand: MD_US > MD_JP
Furthermore, I detest the current Japanese interest rate policy. Usually, the nominal interest rate  is supposed to rise to offset the price inflation rate (ΔP) to keep the real interest rate (r - ΔP: what actually influences the money value held by the savers and the national debt investors) zero at lowest to make it fair and functional. 

The severe problem of Japan is that the current real interest rate for JPY is "negative (-)" which substantially discourages the money demand as well as reduces the real income value (income value depreciated by the price inflation). This is called the inflation tax because the price inflation works as though it were the tax imposed by government allowing the central bank to issue the excess money supply causing the price inflation depreciating the income. Because the inflation rate equally affects all individuals holding JPY, this is indeed a regressive tax (taxing proportionally more to the poorer but less to the rich)!!!!!

The reason why JPY interest rate has neither been raised nor seemed to rise soon is that the Bank of Japan (BoJ) is neglecting the interest rate rise despite this inflation. Actually, the Japanese government reject raising the interest rate because it is more likely to trigger the potential bankruptcy caused by their national debt interest payment overwhelming their budget. ......... thus, JPY holders are now literally experiencing the negative real interest rate steadily depreciating their real income.

Some very rich famous people must have predicted this world economic situation since ages ago. He's accumulated physical gold ingots in his own safe. The current world situation is really dodgy! ... under such a chaotic world situation, I'm thinking of you, my dear friends. Praying for safety of you and your family.

 

 

 

The GDP is an obsolete measurement: The Happy Planet Index (HPI) is worth considering for scaling the socioeconomic well-being

Majority of people still seem to be unhappy and unsatisfied with their life and surrounding socioeconomic situation despite the highly available technology and the robustly growing aggregate productivity and wealth as well as stock price indices.  The study of economics has often focused on the gross domestic product for scaling the economic well-being.  Furthermore, these economists still consider money (fiat-currency) as the intermediary of the exchange all the time so they assume the excess money supply not corresponding to the market demand triggers a high price inflation.  

 

These factors must have been true up to just recently.  Nonetheless, the paradigm of the world socioeconomics has certainly significantly shifted from this classical case.  Moreover, the inflation risk due to the expanded money supply can be quite likely to be a superstition which is not worth off to be scared of.  Well, this does not mean to prioritise controlling the employment over controlling the inflation such as the Phillips curve.  It means to suggest not to be excessively scared of the inflation by means of increasing the money supply.  

The proactive monetary policy has traditionally focused on increasing the aggregate supply offsetting the price inflation by the high output for the return.  Nowadays, in such a post-industrialised world, there is no exact industry which promises to offset the negative effect from the inflation by directly injecting the money supply.  In another word, the aggregate supply is already high enough to satisfy individuals and their life; The only concern is its diversification i.e. the re-distribution.  

There is a reason why it is already unnecessary to be afraid of the inflation.  Nowadays, whenever there is an excess demand or an lacking supply takes place, there is always another supplier jumping into the market to fill the output gap. The speed of the information flow for both financial investment and resource managements including logistics and invention is so high that the macroeconomic gap is immediately reduced. 

 

Then, it comes to the point of applying the money supply.  The most critical point is that these economists still narrow mindedly focus on the GDP.  The GDP is the gross term which can be artificially increased by increasing the several unproductive turnovers so it is not an articulate measure of an economic well being even in the aggregate level. 

More turnovers implies more environmental damages because of the increased logistics consuming fuels and production processes consuming resources.  Therefore, excessively focusing on the GDP may encourage the environmental destruction. This is another reason to discourage excessively focusing on the GDP. 

In addition to these material factors, there is also an ethical concern on excessively focusing on not only the GDP but also any other gains in the financial terms.  When individual economic agents keep competing to maximise their sales volume and financial gain, it comes to the point majority of them working hard face difficulty to survive in such an ultra competitive market.  It eventually induces either a cut-throat competition where everyone loses or a monopoly/oligopoly where only few powerful economic agents monopolise the gain. 

In such a socioeconomic model, individuals are simply exhausted for working hard enough to neglect the other important elements of their life such as family and friend kinships, cultural activities such as arts, sports, and local festivals, and most importantly sparing their time for their physical and mental health. 

It is often wondering why individuals cannot enjoy their life without working so hard. The top 3 countries of the highest GDP are the USA, China, and Japan in which their citizens are expected to work very hard to prop up themselves. Their income gain opportunity maybe high although the price indices i.e. their costs of living are also high.  

In addition, the income inequality (the relative poverty in another word) of the USA and China is significantly high enough to cause various social problems related to the relative poverty. The income inequality, the relative poverty, of Japan has been substantially rising since 1990s so that social problems related to the relative poverty has been rising since then.

 

Many people have started wondering if working hard to increase the GDP is really worth-off to consider their well-being in general.  This is why the alternative measure such as the Happy Planet Index (HPI) introduced by New Economic Foundation has become popular as an alternative of the GDP for scaling the socioeconomic well-being. 

This HPI is calculated by the power of three variables, the survey points of happiness, the average life expectancy, and the income equality (the lowness of the relative poverty) divided by one variable, the ecological foot print (the environmental damage).  

The first variable is a simple surveillance asking randomly picked up people in a country for scoring their happiness from the point up to 10.  This can be subjective and often affected by the climate effect (See also my blog article "Happiness related to Monarchy, One Party, and Democracy").  Nonetheless, it is still an important variable directly measuring whether people are happy overall.  

The second variable is a simple and ostensible measure scaling individual people's health and their security in their living society.  An access to a healthy nutritious diet, satisfactory health services, and a clear natural environment free from pollution, a positive prospect with a low anxiety at the present time period, and a safe community preventing its citizens from mortal incidents.

The third variable has been newly introduced recently.  It may be because the social problems related to the relative poverty are non-negligible to take individuals' happiness into consideration. When the income inequality dispersion among individual citizens is significantly big, many citizens become difficult to afford their basic necessities as well as some luxuries because the price goes up due to the monopoly effect by the rich.  Moreover, many individual citizens tend to feel miserable because they feel like being less worth off than the very fortunate rich cohort of individual citizens.  This is why the crime rate as well as the suicide rate tend to go up when the inequality dispersion is widened. 

The forth variable indicates the penalty of exploiting natural environments by such as natural resource extraction and various kinds of pollutions harming natural environment. This claims for a need of the counterweight against economic activities deserving human individuals.  In particular nowadays, socioeconomic indices should take the sustainability of both individuals themselves and their living environment of the mother earth.  

There are many scepticisms against the HPI, and some of them are really articulate and plausible the disadvantages of referring to this index.  Well, nobody has yet ever discovered a perfect index measuring the socioeconomic well-being overall.  In another word, no index is perfect. However, the HPI seems to be at least more useful, precise, and demanded to scale the socioeconomic well-being especially at the current time period when the paradigm has started shifting and this shift is still in progress. 

Having taken these aforementioned factors into consideration, an economic policy of this new paradigm of this world will needs an alternative measurement of the money supply control to the counterpart implemented by the current status-quo.  In order to allow a national/regional economy to prosper, it requires to install a brand new innovative economic policy not shown in a regular text book especially these days of this paradigm shift. 

It will be kind of imitating the economic policy of Korekiyo Takahashi who used an amazing completely innovative policy which was resemblance to Keynesian economic policy although it was way before J.M.Keynes published General Theory of Employment, Interest, and Money.  

At his time period, the monetary policy theory assuming money (fiat-money) is neutral as it is merely an intermediary of exchange.  This classical economic theory therefore regards that money supply is neutral to economic activities i.e. it is meaning less to supply an excess money for those which do not exist at the present time period (Money supply adjusted to the existing economic output).

By contrast, Mr. Takahashi proactively injected the money supply into various ongoing public work projects such as various infrastructure constructions like building ports.  His policy was dedicated to inject the public goods and services not having existed at the time this monetary policy was implemented.  This was entirely a new innovative original economic policy not having been mentioned in any textbook at the contemporary time period!

There is a reason to claim for reincarnating Takahashi-ist monetary policy into the present world.  The private banks tend to be very reluctant to invest to those which may increase the HPI while not directly returning the financial return for their investment immediately. A further rise in the socioeconomic well-being, maybe represented by the HPI, nowadays may require an immense public sector support such as the monetary policy channel by acentral bank.  

Regardless of either a private sector or a public sector a central bank is, a central bank and its function should be considered as public goods and services which are ought to deserve the public well-beings without concerning about the internal profit maximisation.  A central is least likely be bankrupt among all the other banks as long as people keep using and trusting their supplied money (fiat-currency).

For example, it may be the time to re-evaluate the importance of artists and writers being suppressed by the importance of business persons and manufacturers.  Artists and writers themselves are hard jobs to create the immediate cash but some of them will be remarkably successful enough to advertise their local community and nation they are brought up in.  Then, when a policy allows more individuals to spend their life for their own activities of art and writing without their financial anxiety, the probability of bringing up future celebrity artists and writers may rise. 

Not only the previously mentioned quasi-idealist policy but also there is a very emerging realistic matter to deal with to increase the HPI. As a matter of fact, almost all the countries in the world are not sufficiently investing their public expenditure to education and health services which are crucially correlated to the HPI.  The current world economy demands the tertiary education e.g. university as though it were mandatory.  Monetary investment tends to be often diverted from medics and healthcare because they hardly provide the immediate financial returns.  

Adam Smith, the father of economics, even stated that defence, education, and healthcare could not be considered to grow in a free market economy. Smith put emphasis on the necessary public supports for defence, education, and healthcare regardless of their profit maximisation and the free trade while their existence is mandatory for letting the entire economy and society to prosper.  Thus, even though an investment into education and medical services are not directly converted into the internal profit, there must be a way to ensure enough resources are secured for these institutes being in charge of education and healthcare. 

Korekiyo Takahashi must have realised what Adam Smith mentioned there. At the contemporary time period of Japan, the military infrastructure was a priority to invest while many private sectors were reluctant or unavailable to invest in order to secure their trade routes and defend the nation.  In order to enable the national economy prosper, these infrastructure categories, defence, education, and healthcare are crucial to exist even though the private investors were reluctant to invest.  

This is the time to recall Takahashi-ist economic dynamic today.  There are always something not directly related to the economic outlooks while they must exist to back the entire economy as well as all individuals and their society to prosper.  Even though it does not directly contribute to the financial market or the economic outlooks, popular arts and subcultures will attract more foreigners to a region brining up such talented characters.  A well established culture backed up by education, healthcare, and innovative minds may attract many entrepreneurs to obtain their new inspiration to start their business.  

All in all, it is never a nonsense to combine the monetary supply channel of the monetary policy and the cultural and mental well-beings such as those represented by the HPI.  Manifesto Neo-Takahashi-ism is here!

Mr. Rishi Sunak will well remain in the history of Macroeconomics for his Hawkishness

It is a surprise to see such a Hawkish Chancellor of Exchequer after a decade of the Dovish regime in the world economic policy.  Mr. Rishi Sunak is certainly brave while being a little bit reckless.  It is certainly brave to reveal such a tough Hawkish characteristic . He puts emphasis on his prudent attitude toward balancing the budget. Even under the still anticipated downturn with a still remaining strong anxiety, he is willing to increase the overall taxation (generally slowing down economy) to balance the budget.  He claimed that, failure of balancing the budget eventually results in the rise of both the price inflation and the interest rate for bonds and mortgages is certainly alarming for economy.  

Regarding the usage of the term Hawk and Dove, it does not refer to diplomatic and military policies.  This term is uniquely used in macroeconomic policies related to neither diplomacy nor military.  In terms of macroeconomics, Hawk is tough and prudent whilst Dove is tolerant and loose.  It sounds similar to diplomatic and military policies but the implemented channels and the targets for setting these policies are different and unique in economics. Both have advantages and disadvantages.

Hawks are intolerant towards the enemies of the macroeconomic environmental stability such as the high price inflation (devaluing the income value and disturbs financial planning) and the rumour of distrust from investors and foreign exporters&importers.   They put emphasis on eliminating the root causes of the instability by tightening controls over balanced budgets and setting the central interest rate relatively high enough (plotting to consequently lower the high interest rate and stabilise the real income value). 

Doves are on the other hand tolerant for using loose policies to save individuals and their economic environment from the hardships (such as unemployment and lack of rescuing resources) even with some expected negative side effects.  They frequently claim for need of the looseness because the overall benefit covers the cost incurred by the negative side effect, and it should take place temporarily at least.   

Both are equally good as well as bad because both have disadvantages indeed. Hawks are remarkably unpopular during the unexpected economic downturn because Hawkish austerity is possible to be tough also on majority individuals suffering from the downturn, and then is likely to delay the recovery from the downturn.  Doves are blamed for their speculative projections often underestimating the cost of their policies so it is likely to misjudge of the timing of both imposing and cancelling their loose policies, and then their tolerance contains the high contingent risk of losing the administrative capability. 

Focusing on what Mr. Rishi Sunak is attempts to put into practice, he manages his policies by handing the fiscal policy-channels such as increasing tax rates to increase the inland revenue to reduce the national debt and various bond interest rates. He promises to consequently protect British citizens' income from either the high mortgage interest rate, the high price inflation, and lack of foreign investments with this policy implementation.  

The fiscal policy-channels are able to tune the different tax rate for various targeted segments of economic. Nonetheless, the fiscal policy always contains the mis-selection of the target sectors to increase the tax rate causing the systemic risk collapsing economy caused by penalising the certain sector's performance interrelated to many of the others. This Sunakian fiscal policy is expected to effectively handled to hopefully induce the positive aftermath.    

Mr. Sunak's policy is neither misguided nor irrational.  There are many worthy qualities accountable for encouraging the sustainable robust British economy. Especially, this seems to function for keeping the value of Great British Pound Sterling and secure the trust in the capital market and the foreign trades. Furthermore, his policy takes account of ordinary majority British citizens for securing their future real income value.  At the same time, the biggest concern is to determine whether or not this is the right moment to be tough as Hawk meanwhile the popularity of the looseness is still enthusiastically supported by the mass.

Having analysed these aforementioned aspects, Mr. Rishi Sunak's Hawkishness is neither absolutely good nor absolutely bad; but it is yet controversial.  Only the future might be able to provide the convincing appropriate judgement over his policy-aftermath.

Happiness related to Monarchy, One Party, and Democracy

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



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

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

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



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

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


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

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

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

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

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

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

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

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

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

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

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



The coefficients and their significance is as follows:

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

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



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

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

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

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

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

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


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

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



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

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



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