The world's economic space is four-dimensional.
The world's economy consists of four types of equilibrium: horizontal equilibrium, vertical equilibrium, inter-sector equilibrium, and time equilibrium.
And each equilibrium has three to four axes: horizontal axis, vertical axis, inter-sector axis, and time axis. The world's economic space is four-dimensional.
The economy is maintained by these equilibriums. These four functions - horizontal equilibrium, vertical equilibrium, sector equilibrium, and time equilibrium - form a four-dimensional space.
The market economy is driven by the excess or shortage of funds among sectors. Basically, in the short term, the household sector and the private corporation sector alternate between being a sector with an excess of funds and a sector with a shortage of funds.
The fiscal sector should normally be in a neutral position, that is, it should be in equilibrium, and the fiscal sector should be adjusted to make it a sector with a shortage of funds when funds are supplied. The fiscal sector operates to keep periodic profit and loss (primary balance) in perspective.
And, the financial sector is controlled to maintain it in a neutral position behind-the-scenes. If the financial sector appears on the surface to be a sector with an excess of funds or a sector with a shortage of funds, financing is not being performed well. The fiscal and financial sectors should be two sides of the same coin and function as the nexus of capital circulation.
The overseas sector is adjusted so that the current account balance and capital account balance are in equilibrium from the perspective of an international division of labor. The overseas sector is also a sector that maintains a horizontal equilibrium. The horizontal equilibrium refers to the equilibrium between international markets. The sum of the current accounts in the international markets is a zero sum, that is, it is in equilibrium.
Deficits should absolutely not be defined as something bad. Rather, we should try to take a closer look at the relationships between funding and profit and loss.
Distribution is the essence of the economy. In the market economy of today, produced goods are distributed by means of the circulation of "money." The market economy functions by circulating funds.
If funds are not evenly distributed throughout the entire society, the necrosis of the market will begin from the parts where funds are not flowing. For that reason, the biggest issue in the market economy is how to distribute funds throughout the entire society.
The uneven distribution of funds and the distortion of the flow are what impedes the circulation of funds.
There are two fundamental factors that cause the uneven distribution of funds and the distortion of the flow. One factor relates to given conditions. The second relates to factors that are created by the excess and shortage of funds and the flow.
The given conditions are physical, geographical, and human preconditions. For example, some oil-producing countries in the Middle East are blessed with resources, but the living environment of the people is harsh and surrounded by deserts. On the contrary, Japan is not blessed with resources, but has a living environment with good conditions. And such distortions arise from the basic requirements upon which the nation is established. Even within the same country, the conditions under which the market is established may differ in the coastal regions and the inland regions.
Such given conditions impose decisive constraints on the way the nation's economy develops.
Another factor that causes the obstruction of the flow of funds is the uneven distribution of funds created by the flow of funds and distortions in the flow of funds.
The flow of funds is what makes the market economy function. The excess or shortage of funds is what generates the flow of funds, and it functions to balance the excess and shortage of funds.
The distortions that impede the flow of funds include horizontal distortion, vertical distortion, and inter-sector distortion. And there is also time distortion.
There is a misunderstanding that these distortions and bias will naturally reach equilibrium if left as they are.
In reality, however, if they are left as they are, the distortions will expand and cause disparities and discrimination.
In national economic statistics, the entities that make up the world’s economy are classified as domestic and foreign. In addition to separating the overseas sector from the foreign entities, the transacting entities that make up the domestic economy are classified into five categories: "non-financial corporate enterprises", "financial institutions", "general government", "households" and "private nonprofit organizations serving households."
Among these, because the "private nonprofit organizations serving households" are small in scale, the world’s economy is generally considered to be made up of five categories that include: "non-financial corporate enterprises", "financial institutions", "general government", "households" and "overseas sector."
The basis for the classification as "non-financial corporate enterprises", "financial institutions", "general government", "households", and "overseas sector" depends on the differences in their functional roles.
The role of each one is as follows. "Non-financial corporate enterprises" are involved in production and distribution, "financial institutions" supplement excesses or shortages of funds by lending funds, "general government" is responsible for reallocation of income, building of social capital, tax collection, and administrative management, "households" have a role in consumption, and the "overseas sector" is involved in trade with foreign countries. In addition, "private nonprofit organizations serving households" are responsible for nonprofit business. These "private nonprofit organizations serving households" have only a small economic scale and have little impact on the economy, so they are excluded from economic analysis, but the importance of their work and surroundings is not inferior to other sectors. Instead, they play a crucial role in politics.
Each sector has an economic role. The economy is basically a mechanism for distribution.
Distribution is performed by circulating "money" in the market.
Households are units of consumption, and they are the basis for distribution and become a source of labor.
Enterprises are units of production and rectify earnings and personal income.
The fiscal sector provides public services, builds shared assets (social capital), and redistributes income.
The financial sector supplies the "money" to adjust the excesses and shortages of funds, and "money" flows back into the market.
The overseas sector compensates for the shortages of domestic goods. And it prepares the financial settlements between nations.
The economic functions vary depending on the roles of each sector. For example, investment has different meanings. For "non-financial corporate enterprises" investment mainly means investment in production, and for "financial institutions" it is financial investment. For the "general government" this is public investment in social capital, for "households" it is investment in consumption such as housing investment, and for the "overseas sector" it is foreign investment that accompanies foreign trade.
"Money" is produced by lending and borrowing. The lending and borrowing of "money" produce the same amount of credits and liabilities. Credits and liabilities are symmetrical.
Added value is produced from the debt obligation through market trading. Added value is generated by spatial distances, time differences, etc.
The added value is converted into a time value. Based on the time value, the added value is distributed to profits, depreciation, labor costs, land leases and rent, interest, and taxes.
Depreciation and land leases. As a capital investment, rent is the functioning of the means of production. Labor costs are reduced to income which is a source of consumption. Taxes become resources for the fiscal sector, and interest rates reveal the functioning of stock. Profits are accumulated in deposits. However, the point to be careful about is that depreciation and profits are not consistent with the flow of funds.
Credits and liabilities identify the size of the stock, and the added value creates the flow. Economic efficiency depends on the size of the stock, the range of the added value, and its breakdown (distribution ratio).
Periodic profit and loss is set based on the function. That is, periodic profit and loss is the means used for measuring economic consistency based on the relationships between total assets, total capital, revenues, and liabilities, assuming the acquisition of revenue that is commensurate with expenses.
The fiscal sector sets the amount of revenue that is needed for the planned expenditure. And the expenditure-revenue structure is premised on the equilibrium of government bonds.
This relationship represents the efficiency of funding.
Employment rather than competitiveness is at the heart of trade frictions. The problem lies in the reduction of work.
A labor-intensive industry that is said to have low labor productivity is what is responsible for economic growth and development, and domestic demand. If it is too efficient, economic vitality will be lost and employment will suffer.
Distribution is the main role of the mechanism of the economy.
When attempting to find a solution to the problem, it is necessary to understand exactly the essence of the problem.
To begin with, attempting to provide an answer blindly without understanding what the problem is will make it difficult to reach an answer.
In the first place, when the premise is incorrect, even if you reach an answer, troublesome tasks will remain for later.
If your objective is not clear, you cannot even consider which way you should go towards deriving the answer.
If you are caught up by the immediate phenomenon, you will lose sight of the focus and structures in the background and run off in a haphazard direction.
If you only see the problem simply as a problem, you cannot escape from prejudice and preconceptions, and that will lead to dogmatism. Trade friction is a typical example of this.
The economy consists of five sectors: household, enterprise, fiscal, overseas and financial.
Strictly speaking, there is also the "private nonprofit organizations serving households", but apart from their political influence, they can be ignored since their economic influence is small.
The functions and roles of each sector are as follows. Households are units of consumption, and they are the basis of distribution and become the source of labor. Enterprises are units of production and rectify earnings and personal income. The fiscal sector provides public services, builds shared assets (social capital), and redistributes income. The financial sector supplies "money", corrects the excesses and shortages of funds, and reflows the money. The overseas sector compensates for shortages of domestic goods. The economic objective of preparing for financial settlements between nations lies in distribution. The source of the distribution, that is, the partner in the distribution, is all the people. In other words, it is necessary for the economic system to distribute the wealth evenly to all the people.
What sort of means should be used as the basis for that objective? That is the design philosophy for the structural mechanism of the economy.
In the national economy - a free economy - income is a means of distribution. Fair distribution is achieved by procuring the necessary resources in the market according to income. That is the fundamental concept of a free economy - the concept of a nation state. It is essential that a nation state is established for fair distribution of income to all citizens. Therefore, the basic concept of a free economy is to make standard a labor force that is equally owned by all people as a basis for providing income.
In the end, that is a concept of converging income standards and wage labor.
In that case, striking a balance with private ownership is important. This is because private property is also a means of production that can generate income. Liberalism provides the way to harmonize these two sources of funding.
Through God, this world is unified.
In God, this world is unified.
God is the essence of existence.
Only God can exist through his own power.
God existed before human consciousness ever came into being.
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