Modern people are fundamentally mistaken.
They are misinterpreting the facts.
The economic system, including the market, is a purposeful artificial creation.
Not only the economy, but also the state, the military, companies, schools, and churches—all of these are artificial systems.
They do not come into being naturally.
A democratic, free society is not a society that excludes human intervention and operates naturally. On the contrary, it is an artificial society. If left to natural processes, society would become violent. There is no society without enforcement.
Economic disasters and political disasters are accidents, not natural disasters. Because they are accidents, it is possible to prevent them by clarifying their causes.
First, the fundamental premise is that the market is an artificially created system. This is an unchanging fact. Because it is an artificial system, it has a purpose. The market is a purposeful system. Therefore, it is necessary to clarify the purpose. The purpose depends on the functioning of the market. Next, the market is a system. Systems have structures. Therefore, it is necessary to clarify the structure of the market. The market has principles and rules, which change depending on the situation, environment, and conditions of the market. These are variable. The structure is the institution, and the rules are regulations.
To control the economy, it is necessary to organize the market’s institutions and regulations and decide policies according to changes in the conditions surrounding the market.
What makes the market function is competition based on rules. Without rules, competition cannot exist; a struggle without rules is a conflict, and conflict is violence.
The structure of the market differs depending on whether it is many-to-many, many-to-one, one-to-one, or one-to-many. One-to-many is typical of the military industry and public investment.
Economic value is relative, not an absolute standard. Supply and demand relationships are not constant. They are influenced by people’s preferences and trends. Also, costs are not constant, so it is necessary to arbitrate through competition and transactions in the market. This is why the market exists. When the market is monopolized, the power to determine prices is taken away from the market.
Monopoly prices that do not rely on the market do not reflect the relationship between producers and consumers.
Oligopoly and monopoly do not bring good results for managers either. This is because fair prices and costs are not formed. Fair prices and costs are formed through moderate competition. When competition disappears, ethics are lost. Morale cannot be maintained either. Monopoly and oligopoly have harmful effects, such as the market not functioning.
When the market is monopolized, technological innovation ceases, and it becomes ossified, rigid, and conservative. The ability to adapt to environmental changes is lost. Progress and evolution are hindered. It is necessary to review regulations from the growth period, but this does not mean immediate deregulation. Rather, it is necessary to strengthen regulations to some extent to prevent falling into price competition. Otherwise, everything converges on price, and added value is lost.
Saying that regulations are bad no matter what is like arguing that sports rules are annoying, so let’s get rid of them.
Deregulation intensifies competition and works to suppress prices. It also renews oligopoly and monopoly. It is an effective means during periods of intense technological innovation, such as the generation and growth periods, or in rigid markets, but in mature markets, it tends to lead to price wars and exhaust companies. As the market matures and becomes saturated, regulations tend to be strengthened.
Regulations work to suppress competition and stabilize prices. On the other hand, they ossify, rigidify, and conserve the market, hindering technological innovation and generational change.
Both can become toxic if used at the wrong time and place. It is not about whether regulations are good or bad. It is important to prescribe them according to the desired state, the timing, and the method.
Market entropy increases, and profits tend to be compressed and converge to zero without a system. Competition exists because there are rules. Rules are regulations. However, regulations that hinder market activities and outdated regulations should be eliminated.
Basically, the market is a place to exchange products and “money.” In other words, it is a place where producers and consumers exchange. Consumers are buyers and need to prepare “money.”
“Money” exerts its utility through exchange.
The market has the role of creating logistics through transactions and circulating “money” at the same time.
The market is a system that moves by the flow of “money.”
It is not just about flowing electricity, like electrical appliances. Just as the load when electricity flows exerts its function, the load when “money” flows exerts its function.
The economic system is composed of production, distribution, and consumption, and production alone is not important. Yet, in modern society, distribution and consumption are unduly neglected. This is why the modern economic system does not function properly.
The economy is an activity for living. This is the fundamental premise. Because it is an activity for living, the purpose of the economy is to sustain people. The activity for living is consumption. Therefore, the ultimate purpose of the economy is consumption. Production is a means for that, and wealth is measured by the quality, quantity, and density of consumption.
When considering the economy, it is necessary to clarify what kind of living environment we desire. The living environment is the place of consumption. Do we desire a cold factory or a desolate place where one person is just given a large amount of tasteless industrial food? Or do we desire a warm, relaxed place where we can enjoy warm, heartfelt meals with family and close friends? Do we desire to shop alone in a deserted warehouse-like place? Or do we prefer a space where we can enjoy shopping with everyone with kind and heartfelt service? First, it is necessary to clarify this point.
If we focus only on production and making money while neglecting distribution and consumption, what kind of society will we have? Mass production, disposability, discounting, automation. The market is a place of life, yet people are being excluded. When lawless discount vendors enter shopping streets, the shopping streets wither. The quality of distribution and consumption deteriorates.
To make the market work, it is necessary to distribute “money” in advance. For that, occupations become important. In other words, the production environment. Simply relying on wage labor in organizations like the state or large corporations may be easy to manage, but it suppresses individual work. Fundamentally, a free society and free economy are based on economically and politically independent individuals. We must not forget this point. This is the fundamental premise. If economic and political independence is denied, a free society cannot exist.
Therefore, freedom of occupation choice must be guaranteed.
A comfortable living space. That is what the economy aims for. It is not “money.” It exists outside of “money.”
The biggest mistake of economists so far is thinking that the economy is a matter of “money” and goods. The economy is a matter of people. It is a matter of how people live. It is a matter of life.
Is a huge warehouse-like store surrounded by a crowd of unemployed people an ideal economic state? Many current economists, managers, and politicians seem to think so. It is like entrusting war to machines and AI, thinking that harm will not come to oneself, but eventually, the blade will be turned towards oneself. Because it is people who can start and end wars. Even if humanity perishes due to nuclear weapons, responsibility cannot be shifted to nuclear weapons. Responsibility lies with those who developed and used them.
What is important in the economy is the state and situation. It is not the price. It is about what kind of environment is created through sales activities.
Making money is not the purpose.
Making money is a means.
If this point is misunderstood, the essence of the economy is lost.
It is economic life.
Finding a job, working, building a house, getting married, having children, and living a life. That is the basis of the economy.
There is no inherent nobility or baseness in the body. It is not that the anus is base or the head is noble. What matters is the work.
What kind of living environment do we desire? First, it is necessary to clarify the vision of the environment we desire to live in. In the past, there was a vision, and urban planning was created based on that vision. It was not just about making money first and then building houses as one pleased. There were rules. That is what formed beautiful streets. However, in the feudal era, the intentions of feudal lords took precedence. In modern times, it is a nation-state, so the will of the residents should be respected. Nevertheless, it should not be lawless or anarchistic, allowing houses to be built without any regulations. It is difficult to build roads later.
Urban planning is necessary. In urban planning, it is important to clarify the center. Once the center is established, infrastructure such as roads and ports should be developed to improve transportation.
The economy is a matter of community and life, and it concerns living space and environment. It becomes a matter of urban planning and living environment.
In a free economic system, the functioning of the market is important.
The market is a place of transactions. It is a place to balance supply and demand, adjust production and consumption, determine prices, determine costs, and flow “money.”
The market consists of the whole and parts. If the consistency between the whole and parts is lost, the market cannot function. The division into micro and macro itself is evidence that economics is not functioning. Because maintaining the consistency and coherence between the whole and parts is the essence of economic policy. If the whole and parts are separated, the consistency and coherence of the policy cannot be maintained.
Companies are profit-making activities. It is not bad to create a market structure where profits can be made.
It is not that shortage is bad, excess is bad, or surplus is bad, but that it is bad to have a constant state of shortage or excess. On one hand, if there is a shortage, on the other hand, there will be excess.
Even if we say “market” in one word, many markets come together to form one whole. Moreover, each market that constitutes the parts has its own characteristics, development stages, functions, structures, and history. For example, the market structure differs depending on the industry. The market is completely different in the oil industry, the automobile industry, and the information industry. Even within the same industry, the market differs at each stage, such as manufacturing, wholesale, sales, and distribution.
For example, the oil industry has a crude oil market, and further, gasoline, lubricants, and each product have their own market structures. Also, there are markets at each stage, such as primary sales, special agents, and sales. The market in the oil industry is different from the IT industry in terms of development stages.
The market differs depending on whether the product is industrial goods, fresh food, art, crafts, or services. Also, the market for industrial goods differs depending on the production method, such as made-to-order or equipment industry. It also differs in terms of the size of initial investment (profit structure).
The market differs depending on whether it is a period of transformation, growth stage, maturity, or saturation. It also differs depending on whether it is an oligopoly or monopoly market.
The market changes depending on whether the industry is affected by exchange rates or not. The impact of exchange rates also differs depending on whether the industry is directly proportional or inversely proportional to exchange rate changes.
Products like agriculture are affected by weather, industries like fisheries are influenced by environmental changes and harvest volumes. Industries affected by seasonal fluctuations. Industries where freshness is important. Whether it can be preserved or not, whether costs are incurred for preservation and inventory. Products that become obsolete or deteriorate. Influenced by trends.
Political or accidental influences. Raw materials like oil and rare metals are produced in specific countries.
Without a market, technological innovation cannot be expected. In a mature market, if excessive competition is imposed, it leads to price competition and advances oligopoly and monopoly.
If the market is left unchecked, it falls into a state of disorder. Competition exists because there are rules and regulations, so denying regulations themselves leads to anarchism and violence. That is not competition but conflict.
If the market is left unchecked, entropy increases, leading to a final state of price-only competition, compressing profits, suppressing competition, and moving towards a single, unified direction.
Originally, the market functions are maintained by maintaining many-to-many relationships. Markets that fall into one-to-many, many-to-one, or one-to-one states do not function properly. Economic value is relative, and the market is necessary to maintain relativity.
Industries like food and beverage are typical examples of market diversity.
Regarding the Market
Firstly, the market is an artificial system.
Secondly, the market consists of the whole and its parts. Each part forms an independent market, similar to cells. The parts are interrelated and constitute the whole.
Thirdly, the market is a purposeful system. Every part that constitutes the whole has its own purpose, role, and function.
Fourthly, the market is a place of transactions. Transactions are equivalent exchanges between sellers and buyers, “money” and goods. Transactions arbitrate the monetary value of goods and serve as a place for settlement. Transactions are established through buying and selling.
Fifthly, the market is based on a monetary economy. In a market economy, it is a prerequisite that all consumers, i.e., citizens, have “money” as a means of payment. Additionally, it is assumed that all economic values can be converted into monetary terms.
Sixthly, “money” is lost as it is spent. Therefore, it needs to be continuously replenished. Means of replenishing “money” include borrowing, selling, and working.
Seventhly, the market has rules.
Eighthly, the market is a place of exchange. It circulates “money” and goods through exchange. Without exchange, the market cannot exist. Without sellers, buyers, “money,” and goods, the market cannot be formed. Producers distribute “money” to consumers (workers) in the production process and recover “money” by selling products to consumers. Therefore, if income and prices do not balance, neither “money” nor goods will circulate.
Ninthly, the market has developmental stages and history. The prerequisites of the market change according to its developmental stages.
Tenthly, the market is established by several prerequisites. The characteristics of the market change depending on geographical conditions, population, and the presence or absence of resources.
Eleventhly, the market transforms due to environmental changes. The conditions change before and after the market reaches saturation, i.e., it transforms.
Twelfthly, market prices are determined by supply and demand. Demand is based on consumption, and supply is based on production capacity. Therefore, supply and demand control consumption and production.
Thirteenthly, market prices are confirmed by the act of paying “money” (settlement).
Fourteenthly, the market environment is influenced by employment (income) and living (expenditure). It affects the way of occupation and life.
Fifteenthly, the market structure differs depending on the product.
The market characteristics differ between products like agricultural goods, which are influenced by weather, and industrial products, which are not.
The characteristics of commodities, i.e., products that cannot be differentiated, differ from those that can. The market differs between products that are subject to trends and those that are not.
The market cycle differs between consumables and durable consumer goods.
Sixteenthly, the market functions differently depending on whether it is monopolistic or oligopolistic.
Seventeenthly, the surplus or deficit of income and expenditure is supplemented by borrowing and lending. Borrowing and lending prepare “money” for payment.
The origin of “money” supply to the market is borrowing and lending.
Generally, the production entity and the distribution entity are one. The production entity produces, and the distribution entity distributes according to work. The way of distribution also affects the market.
The backbone of the economy is created by the production system and the distribution system.
It is a fallacy to think that everything will go well if the regulations of such a complex and diverse market are relaxed. Regulations should be reviewed according to each market. For example, even within the same petroleum products, the markets for lubricants, gasoline, and naphtha are different.
The Reality of the Market
When we think of a market, we tend to imagine a space where many shops gather. However, the “market” referred to here is not limited to a physical location.
Markets are not only formed in physical spaces but also in information spaces. Today, markets in information spaces are expanding more significantly. A market is a place for transactions.
Even when we talk about the oil market, there’s first the crude oil market, and then markets are formed at each stage: refiners, wholesalers, and retailers. Furthermore, within the retail market, markets are formed according to customer needs and applications, such as liquefied gas, gasoline, lubricants, naphtha, heavy oil, and kerosene. Each of these markets has a purpose, role, and function. Moreover, the structure of these markets differs. For example, liquefied gas is delivered individually, gasoline is sold at stations, and naphtha is for industrial use.
Markets arise for each product, at the junction between production and consumption. They play a role in structuring the entire industry. Understanding these things requires experiencing the economic realities firsthand, making it difficult for those without practical experience to grasp the actual situation.
This is because they cannot see the movement of people, goods, and money working behind the numbers. The real market is like a rugged path formed by the actual movement of people, goods, and “money.” Markets are formed by the gathering of these flows.
Markets are formed in the process of distribution that connects production and consumption. And in that process, they create jobs. What is important is that this process not only creates demand for goods but also demand for people (employment) and “money.”
Jobs are created along the flow of goods, people, and “money,” and markets are formed where the results of these jobs gather. Market economies are about systematically constructing this. Therefore, people who can design markets are needed.
If the flow of “money,” people, and goods is omitted, prices will decrease, but at the same time, the flow of “money,” goods, and people will also cease, and the economy will weaken. That is why regulation is necessary. Making a profit is not evil, and expenses are not wasteful; they are appropriate compensation. Debt circulates “money.” Appropriate debt is an indispensable element.
Therefore, we should emphasize the act of working.
Cost accounting can be helpful in understanding such markets. This is because cost accounting methods have calculation methods tailored to every industry. It systematizes the characteristics of individual industries to that extent.
For example, industries can be classified using process costing and job order costing. Markets can only be grasped through practical experience.
When considering market policies:
To clarify the actual state of the market, first, confirm the basic requirements and identify what kind of market it is. Then, clarify the purpose of the market. For example, in the case of oil wholesalers, the purpose is the refining and sale of petroleum products.
Next, clarify the role, position, and function of the market. Crude oil is imported, refined, and sold to special agents (some retailers and direct sales). It is easily affected by exchange rates and crude oil prices. Energy is infrastructure for both industry and households. It is regulated, such as the obligation to stockpile.
Then, confirm the environment and conditions in which the market is placed. The exchange rate is strong, and last year subsidies were received from the government. The situation in the Middle East is uncertain due to Israel’s invasion of Gaza. Crude oil procurement sources include Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Australia, Indonesia, Russia, etc., and there are geopolitical risks.
Clarify the state of the market. The sellers, the wholesalers, are currently consolidated into three groups. The number of customers, i.e., gas stations, was 27,414 at the end of fiscal year 2023.
What kind of situation is desired? Stable supply, price stability, environmentally conscious policies such as global warming measures, and decarbonization.
Based on these premises, systems, regulations, and policies are constructed. The oil industry faces institutional constraints such as the oil tax system. The oil industry has been subject to numerous regulations in the past.
In 1962, the Petroleum Industry Law was enacted, aiming to maintain order in the petroleum industry and address majors. From 1986 to the 1990s, deregulation was implemented in various aspects such as refining, distribution, import, and retail. In 1995, the “Law Concerning the Arrangement of Related Laws for the Stable and Efficient Supply of Petroleum Products” (Petroleum Related Arrangement Law) was promulgated, and the Petroleum Stockpiling Law and Gasoline Sales Business Law were amended. At the end of December 2001, the Petroleum Industry Law was abolished, and the main regulations for the petroleum industry became the Quality Assurance Law and the New Petroleum Stockpiling Law. Subsidies as policies.
Consider the impact of systems, regulations, and policies and their future direction.
The market seeks a balance between income, prices (inflation), and expenditure.
In the market, “money” flows from consumers to producers and is collected as revenue.
“Money” is distributed from producers to consumers as income through the production process.
The market is a place that connects and adjusts production and living (expenditure).
Distribution is deeply related to employment.
Employment is the key to production and expenditure.
Expenditure promotes consumption.
Consumption is expenditure and living. It is meaningless to seek productivity in expenditure. The economics of production, distribution, and consumption are different. If productivity is demanded in all aspects, the economy will not function. Even if mass production is productive in the production phase, diversity may be required in the consumption phase. Even if it is said that mass-producing a small variety of food in a factory is productive, it is a different story whether consumers want it.
In terms of clothing, it is like the Mao suit. Consumption reflects individuality, which is a matter of personal preference.
The final consumers are households and public institutions. The cycle of production and the cycle of life are different. The production cycle is related to the production process. The life cycle is based on a person’s lifetime. The market’s role is to adjust the difference between the production and life cycles. The difference between the production and life cycles becomes the difference between the income and expenditure cycles, causing temporal surpluses and shortages. Savings and debt correct this. Savings and debt are the same thing from different perspectives. In other words, a depositor’s deposit is a debt from the perspective of the depository. Investment is also a loan from the perspective of the investor, but a debt from the perspective of the investee.
The difference between the production and consumption cycles can be said to be the difference between the time required to manufacture a product and its lifespan.
A typical example is durable consumer goods, such as automobiles and furniture. There is also a significant time difference between the time required for housing construction and its lifespan. When the market becomes saturated, it shifts from new demand to refinancing and replacement demand. It becomes necessary to review systems and regulations in response to market changes, but this does not necessarily mean deregulation.
The final consumers are households, the government, and public institutions.
Investments related to consumption include housing investment and public investment. Housing investment and public investment are backed by debt.
Behind the market, there are lending and borrowing relationships. For example, there are home loans and car loans. In addition to monetary loans, there are also physical loans, such as rent.
Thus, the market has a structural function.
The market structure includes the number of producers and consumers. Supply capacity and consumption capacity. The amount of investment. Depreciation periods. Sales methods and payment methods (such as installments).
It is also influenced by product characteristics. Product characteristics include industrial products, agricultural products, livestock, fisheries, and services. Whether product differentiation (design, performance, etc.) is possible. Whether it can be preserved. Whether it has seasonality. Whether it is affected by exchange rates. Whether there is a bias in the production area, whether it can be self-sufficient, and how logistics are.
The market is also influenced by the supply chain. For automobiles, there are car loans, gas stations, modifications, and auxiliary and secondary markets.
Due to the structural function of the market, structural analysis is required.
To understand the functions and issues of distribution and expenditure, it is necessary to observe what corresponds to what. Based on that, we need to examine the relationships involved. This directly affects the real economy and policies.
Is there a correlation? Is it directly proportional? Inversely proportional? It is not always good for things to be constant or fixed.
Employee compensation corresponds to private final consumption expenditure. Fixed capital consumption is considered to correspond to gross fixed capital formation.
Taxes on production and imports correspond to government final consumption expenditure.
The issue lies in how each of these corresponds, and without movements towards equilibrium, the discrepancies will widen.
Gross Fixed Capital Formation
Gross fixed capital formation refers to the acquisition of tangible or intangible assets by private corporations, public enterprises, general government, non-profit institutions serving households, and households (individual enterprises). This includes housing, buildings, machinery and equipment, transportation equipment, and computer software.
Government Final Consumption Expenditure
Government final consumption expenditure is the cost of producing services provided by the general government, minus the sales of goods and services to other sectors, plus in-kind social transfers such as medical and nursing care expenses.
Private Final Consumption Expenditure
Private final consumption expenditure is the sum of household final consumption expenditure and final consumption expenditure of non-profit institutions serving households, referring to the expenditure on goods and services consumed by households and private non-profit institutions.
Fixed Capital Consumption
Fixed capital consumption is the estimated value of the decrease in value of reproducible fixed assets such as structures, equipment, and machinery due to normal wear and tear, aging, and routine accidents.
Operating Surplus and Mixed Income
Operating surplus is the profit obtained by enterprises from production activities after deducting the cost of intermediate goods. Mixed income represents business income that includes the labor contribution of individual business owners, indicating the production contribution of the household sector.
Compensation of Employees
Compensation of employees is the total amount distributed to employees from the value added generated by production activities in industries and government agencies. This includes wages and salaries paid in cash or in kind, and the employer’s contributions to social insurance.
Taxes on Production and Imports
Taxes on production and imports are taxes imposed on producers in relation to the production, sale, purchase, or use of goods and services. These taxes are often passed on to consumers and include the following types:
- Consumption tax: A tax on goods and services consumed domestically.
- Customs duty: A tax on imported goods aimed at protecting domestic industries.
- Liquor tax: A tax on the production or import of alcoholic beverages.
- Real estate acquisition tax: A tax on the purchase of real estate.
- Stamp duty: A tax on specific transactions.
- Business tax: A tax on business activities.
- Property tax: A tax on the ownership of fixed assets.
- Automobile tax: A tax on the ownership of automobiles.
These taxes play an important role in supporting government revenue.
A market is defined as a place for transactions.
There are rules in the market. The rules of the market are determined by the rules of transactions. Transactions mean buying and selling. The place of transactions does not only mean physical space. It can also exist in the information space.
A market is an artificial place formed by transactions.
A market is composed of multiple sellers and buyers, goods, and “money.” The relationship between sellers and buyers is many-to-many. Even if transactions are established in one-to-one, one-to-many, or many-to-one relationships, a market is not formed. This is because one-to-one, one-to-many, or many-to-one relationships do not constitute a space.
Since the market is a place for transactions, the systems and regulations differ depending on the characteristics of the goods handled. In other words, the nature of the market depends on the goods being handled. Therefore, the classification of goods becomes important. Additionally, since transactions involve buying and selling, the way of buying and selling and the mechanisms that make buying and selling possible also matter. For example, mortgage loans, transaction formats, market customs, such as auctions. Whether the means are through the internet, gathering, or stores. The nature of the market also differs depending on the use of the goods.
Since transactions involve buying and selling, the nature of the market also differs depending on the method of settlement.
Since the market is formed in the process of production and distribution of goods, it is formed along the supply chain. It also depends on the method of production of goods. This can be referenced from cost accounting.
The nature of the market also differs depending on the scale and scope of the market. A typical example is whether the market is limited to domestic or extends to foreign countries.
Such characteristics of industries can be standardized by referring to management indicators issued by public institutions. For example, corporate statistics issued by the Ministry of Finance or small and medium-sized enterprise management indicators issued by the Small and Medium Enterprise Agency. Or tax statistics.
Economics should not be judged by good or bad, but should be considered by its functions. Profit, cost, and debt are not bad things. Each has its function, and the issue is whether they are fulfilling their appropriate functions and original roles.
The source of income is revenue, and revenue is also an expense, which is the consumer’s expenditure. Therefore, the consistency and unity of production, distribution, and consumption are maintained.
There is an argument that “money” is preparation for payment, so it should be distributed separately from income. However, if such a thing is done, the unity of the system will be lost, leading to uncontrollable situations.
When taking any measures, it is necessary to predict in advance how the impact of those measures will affect other parts and what results it will bring. Also, it is necessary to predict how it will affect the whole. This is because mechanisms and organizations are established by being interrelated.
Currently, tax reduction is being discussed. The reason for tax reduction is that prices have risen. However, when discussing tax reduction for such a reason, it is necessary to clarify the causal relationship between taxes and prices. Often, when tax reduction is discussed, people question the source of funds, but it is not that simple. Even if taxes are reduced, the resulting revenue shortfall will be compensated by government bonds, which will increase the currency volume and push up prices. This is because government bonds are converted into banknotes and released into the market. In modern times, despite the rampant issuance of government bonds, prices do not rise because there is no demand for funds from companies, and they are not supplied to the market as loans. They are just piling up as current deposits at the central bank.
If there is a shortage of goods and prices rise, costs will rise, which will push up income, increasing the demand for funds. This is cost-push inflation, not price increases based on economic growth. In other words, it is stagflation, which is price increases during a recession. Moreover, if the fiscal situation is bankrupt, effective monetary policy cannot be taken, increasing the risk of hyperinflation. If policies are not decided carefully considering such risks, it will lead to disastrous results. However, even so, people’s lives must be maintained. If life becomes unsustainable, people will become violent to survive.
Originally, a healthy market economy should ensure income and tax revenue by private companies achieving appropriate revenue and recovering investment funds. Excessive deregulation causes excessive competition and pressures corporate revenue (deregulation is deflationary policy). Aggressive disposal of non-performing loans lowers asset values and reduces funding capacity. The shift to non-regular employees such as dispatch workers hinders healthy household debt. Zero interest rate policy undermines the soundness of financial institutions.
Indeed, the seniority system and lifetime employment system during the growth period brought about problems such as retirement benefits, human resource development, and market rigidity after transitioning to a mature economy. However, saying that regulation is bad and should be abolished at all costs is an extreme argument.
When considering the economy, the following points become key:
One is the currency volume, with the source being the balance of banknotes, government bonds, and deposit balances. The surplus and deficit between sectors represent the flow of funds between sectors. The lending and borrowing between sectors represent the stock accumulated in each sector, which becomes distorted when it grows large. Supply and demand represent the surplus and deficit of goods. The balance of prices, income, and expenditure is important for the breakdown of production, income, and expenditure, and the relationship between production, distribution, and consumption. This represents the balance of money, goods, and people.
Also, as indicators to examine the impact from overseas, the price difference between domestic and foreign, current account balance, and exchange rates can be mentioned. It is necessary to clarify the premises on which these are based and the direction in which they are flowing. It is necessary to accurately predict the results and conditions that the policy you are trying to adopt will bring.
Policies should be considered structurally.
With the advancement of AI today, it has become fully possible to comprehensively examine the whole and the parts.