A Finance-Based, GO-Alternative to Resolution of Nominal SESH Externalities
A Finance-Based, GO-Alternative to Resolution of Nominal SESH Externalities
GangaPrasad Rao
gprasadrao@hotmail.com
It's in the papers - the Chennai edition of The Hindu, that is. Cooum river, a flood channel in the incessant ‘winter rains’, but otherwise an open conduit for untreated sewage that drains through garbage dumps on its banks, is back in news…. Surprise, surprise, for the same reason again! Flowing through the unorganized suburbs that provide refuge to the working class employed in cities, and which host the low-value added, downstream ancillary industries, the river has largely lost its ecological and social significance, and serves as a local environmental sink - a garbage channel that is more useful to the economy in its role of channeling slush money to nominal politicians and abetting contractors.
The Cooum is but one example of the social and environmental externalities engendered by the Nominal economic paradigm. You may wonder what factors cause such degradation of rivers that could, just as well, be lined by prime economic property if they were to flow in their pristine state. The answers are manifold. Environmental and equity functions are, apparently, ill-discharged by Nominal governments that collude with ZS-Capitalists and operate in the opposite of the Poor, if not the Public. The competitive nominal economy, perversely, rewards those suppliers who cut social and environmental costs, and rivers, due their inter-jurisdictional expanse, are natural sinks under such mal-incentives. Small precincts do not have the size (or the population density) to invest in large-, fixed cost investments in sewage network, treatment and disposal. Other precincts lack the administrative mechanism (or, political intent) to build STPs. Yet others might, but corruption up and down the administrative mechanism delays, if not stymies, public work. Elsewhere, Commercial and industrial establishments, that spring up haphazardly, have neither the means, nor the intent to mitigate or treat their environmental releases. Compounding these mal-incentives, residences and commercial/industrial facilities are sometimes built without permits, authorizations, or operate without proper industrial licences and environmental permits. Inadequate funding and staffing (not unintentional), distributed administrative control (or, overlapping/undefined control/property rights) over the Commons further obfuscates the issue, constraining the Government machinery from addressing externalities caused by entities that, legally, do not exist or operate. In such context, the release of untreated sewage and industrial effluents, upstream or downstream, further mis-incentivizes actions and allocations in other precincts along the river. Each precinct blames others - a perfect excuse for politicians and officials of the local governments, State, even national institutions, to shy away from their duties, and enrich privately of their inaction. Such incentives are further exacerbated when erring entities belong to, and are ’sponsored’ by the Government Opposite, GO, a constituency that de-facto serves as a Suppress group for the Nominal Privates to enrich off under a multi-party democracy. The outcomes are all too evident - an exacerbation of the SESH violations that often target the marginalized poor, those in the hinterlands, and the discriminated minorities. More significantly, the problem, just as economists would predict, perpetuates until the media, perhaps under international pressure and simmering discontent of the voting public, is constrained to report on it despite political dissuasions. Cooum is just one, even a lesser example of the malaise that underlies pollution of rivers and water bodies in India. The problem is widespread and acute in the many over-populous, industrialized cities and towns of this nation and other LDCs, and begs of an immediate, even if interim solution, that reverses course, so to say, and realigns the river along the course to sustainability.
Now, I could write about enhanced budgetary allocations, improved administrator oversight, monitoring and enforcement by the designated institutions of the Government, but I wouldn't have your attention to this blog any further. Instead, I broach an unconventional, out-of-the-box, interim, albeit a generic proposal that has half as good a chance as any that has been implemented to address externalities (or shelved) across the decades of mis-governance. Since the problem is one of overlapping/inadequate property rights, as well as the illegal and unrecognized existence of polluting residential and commercial entities that escape the legal cognizance and redressal mechanism of the Government, couldn't we resort to the institutions that represent the Government Opposite to provide a market-based, financial alternative to the administrative system offered by a democratic government? The GO recommends itself for various reasons including the fact the Nominal Government oftentimes limits its economic interest to populous cities and larger towns, ignoring the vast traits in betwixt. Further, the GO, representing social, economic and geographic space excluded by the Nominal paradigm, has a publicly-recognized claim to Mint Gold, and may be deemed to be operating under a Gold-collateralized GO Cause Bond that yields FV, PV, and other lines.The G.O is also a sponsor of those economic activities that are marginally superior to lending support to public infrastructure projects (which, literally, offer an LQ-Upgrade to the Nominal citizenry for the smallest increment to GO Members).
Given the size of the GO Constituency, the magnitude of its Gold reserves, and the spatial and temporal domain of its Cause, it is prudent to vest Insurance Houses with the administration of the GO Cause Bond. Insurance Houses that offer private insurance to the Nominal economy and participate in the public nominal bond markets, would also privately administer the GO Social Cause Bond through entities of the Local Government and the NGOs. In this context, consider the Local Government (as distinct from the Federal/State nominal government) espousing a ‘Passurance Tourism’ economy in the opposite of the GO interests who advocate supporting a ‘Tourism-SESH’ society, while the Insurance Houses, albeit Bond Administrators, are staked in ’Bakey Volatility’ between the two Causes (ie, a Pareto confluence). Thus, Insurance Houses issue Gold-collateralized GO-Cause Bonds privately to Local Government entities on one hand, and the GO Community interests on the other, both opposite the public Sovereign/Corporate Bond market in which Insurers arbitrage for yield across bonds of various tenures. Thus conceptualized, the 2 entities further their interests within the private GO Cause Bond, while the Insurance Houses operate in the Public Bond market. As Administrators, the Insurance seeks to minimize Volatility in the GO Cause Bond, even as it reallocates its Bond holdings across tenures to zero out yield-sourced arbitrages in the Nominal Bond market. These Insurance Houses deem the operation of the GO Cause Bond secondary (although complementary) to their primary purpose of extending private commercial insurance in the Nominal economy. If Cause Bond resources, whether PV-financially through NGOs, or by implicit FV support of Local Government budgetary lines, funded administrative and SESH-activities in the GO hinterland, then the Insurance Houses would have the control necessary to keep public administration entities in GO constituencies on their toes, and ensure they attend to nominal externalities and impacts upon the GO. Thus, and should the Government apparatus fail in attending to Passurance-Tourism-SESH matters, or ignore (inter-jurisdictional) externalities engendered by its pursuit of the Nominal, the Insurance Houses would perceive the ’Cause-Redux’ as exacerbating volatility in the GO Cause Bond market. Since Sovereign/Corporate bonds are both Nominal, their Volatility would subside in such periods, causing Insurance Houses to defer their yield-based Bond arbitrage trades. Unable to profit off the Nominal Bond market, Insurers would choke-off Bond-Yield Arbitrage FV funds to the local governments. Instead, they'd fund the resolutions necessary to return the Cause Bond back on to its tracks by PV-monetizing the ‘Nominal Bond Bakey Volatility’ in the Gold Volatility Hedge market (shorting Gold when it appreciates with Nominal GDP growth), and routing Real-PV fund streams to NGOs that implement its correctives. Confronted by the prospect of a fund-choke by Insurance Houses, and/or a loss of governance authority, the Local Government machinery would respond more effectively in GO constituencies, or cede governance territory to the GO NGOs.
One might wonder whether the Insurance Houses have the appropriate incentives to act in the interests of the GO Community. Thankfully, and since Insurance Houses are dominant players in the Nominal Bond market, it is always possible for the affected GO Members to intervene in the Bond market with ‘Passurance/Tourism/SESH Negatives, PTSESH Negatives, (PTSESH Negatives, as defined by GO Cause Bonds, are those socio-environmental endpoints/outcomes, and those instances of policy, actions, inactions as well as violations and infractions, that cause significant, irreversible and costly-to-correct damage to GO society, it's environs and its Passurance-Tourism-SESH economic potential). These Negatives, some of which are likely externalities, trigger early, but are only taken cognizance of much later by Insurance Houses to whom the GO Cause Bond is secondary. In the meanwhile, these Negatives may be exploited by GO Members in Nominal Bond trades for their blackmail value and/or the economic opportunities embedded within until Insurance House takes NAV-Cognizance of them in the Cause Bond market. (The Negatives could also be exchanged underhand with the two opposing Cause Bond stakeholders for the Plaintiff's private gain at the expense of the less diligent/less-sensitive members of the GO society). Such speculative trading in the Nominal Bond market interrupt yield-arbitrage trades engaged in by Insurance Houses, and force them to take early cognizance of the PTSESH Negatives in the Cause Bond market. Thus, should Insurance Houses, in their role as GO Administrators, not lend a sympathetic ear to affected GO-members, and should such members have a worthy plaint as evidenced by the market-worth of the PTSESH-Negatives they hold, the latter would hold the power to extract blackmail rents in the Nominal Bond market, and cause significant losses to Insurance Houses and those long in the Cause Bond. The fear of such losses would induce the Insurance House, but also the Local Governments and NGOs to clean up their act, take early cognizance and resolve the Negatives at an early date. Thus conceived, many stubborn SESH-externalities that infest GO constituencies could be resolved advantageously and expediently.
The Nominal paradigm is a multi-headed monster that engenders many an externality, and causes untold social miseries to members of the Suppress group opposite it. A Real resolution is, hence, expressly necessary. Unlike the GO, which is an unwilling abettor to the designs of the Nominal, Insurance Houses, built on the edifice of Sustainability-sourced security, are willing accomplices of the Nominal. It is hence expedient of Insurance Houses to resolve the sustainability-violations caused by their one-sided protection of Nominal interests. The proposed design, a first step toward a sustainable resolution of the Nominal externalities and impacts, has global relevance and offers a credible alternative to the existing centralized, nominal government that enforces the will of Nominal Privates upon the Poor and the GO. The proposed strategy is opportune for Insurance House that are required to further sustainability in the pursuit of their businesses and has the potential to resolve many externalities and development crises characteristic of Nominal-directed growth in the GO hinterlands.
GangaPrasad Rao
gprasadrao@hotmail.com
It's in the papers - the Chennai edition of The Hindu, that is. Cooum river, a flood channel in the incessant ‘winter rains’, but otherwise an open conduit for untreated sewage that drains through garbage dumps on its banks, is back in news…. Surprise, surprise, for the same reason again! Flowing through the unorganized suburbs that provide refuge to the working class employed in cities, and which host the low-value added, downstream ancillary industries, the river has largely lost its ecological and social significance, and serves as a local environmental sink - a garbage channel that is more useful to the economy in its role of channeling slush money to nominal politicians and abetting contractors.
The Cooum is but one example of the social and environmental externalities engendered by the Nominal economic paradigm. You may wonder what factors cause such degradation of rivers that could, just as well, be lined by prime economic property if they were to flow in their pristine state. The answers are manifold. Environmental and equity functions are, apparently, ill-discharged by Nominal governments that collude with ZS-Capitalists and operate in the opposite of the Poor, if not the Public. The competitive nominal economy, perversely, rewards those suppliers who cut social and environmental costs, and rivers, due their inter-jurisdictional expanse, are natural sinks under such mal-incentives. Small precincts do not have the size (or the population density) to invest in large-, fixed cost investments in sewage network, treatment and disposal. Other precincts lack the administrative mechanism (or, political intent) to build STPs. Yet others might, but corruption up and down the administrative mechanism delays, if not stymies, public work. Elsewhere, Commercial and industrial establishments, that spring up haphazardly, have neither the means, nor the intent to mitigate or treat their environmental releases. Compounding these mal-incentives, residences and commercial/industrial facilities are sometimes built without permits, authorizations, or operate without proper industrial licences and environmental permits. Inadequate funding and staffing (not unintentional), distributed administrative control (or, overlapping/undefined control/property rights) over the Commons further obfuscates the issue, constraining the Government machinery from addressing externalities caused by entities that, legally, do not exist or operate. In such context, the release of untreated sewage and industrial effluents, upstream or downstream, further mis-incentivizes actions and allocations in other precincts along the river. Each precinct blames others - a perfect excuse for politicians and officials of the local governments, State, even national institutions, to shy away from their duties, and enrich privately of their inaction. Such incentives are further exacerbated when erring entities belong to, and are ’sponsored’ by the Government Opposite, GO, a constituency that de-facto serves as a Suppress group for the Nominal Privates to enrich off under a multi-party democracy. The outcomes are all too evident - an exacerbation of the SESH violations that often target the marginalized poor, those in the hinterlands, and the discriminated minorities. More significantly, the problem, just as economists would predict, perpetuates until the media, perhaps under international pressure and simmering discontent of the voting public, is constrained to report on it despite political dissuasions. Cooum is just one, even a lesser example of the malaise that underlies pollution of rivers and water bodies in India. The problem is widespread and acute in the many over-populous, industrialized cities and towns of this nation and other LDCs, and begs of an immediate, even if interim solution, that reverses course, so to say, and realigns the river along the course to sustainability.
Now, I could write about enhanced budgetary allocations, improved administrator oversight, monitoring and enforcement by the designated institutions of the Government, but I wouldn't have your attention to this blog any further. Instead, I broach an unconventional, out-of-the-box, interim, albeit a generic proposal that has half as good a chance as any that has been implemented to address externalities (or shelved) across the decades of mis-governance. Since the problem is one of overlapping/inadequate property rights, as well as the illegal and unrecognized existence of polluting residential and commercial entities that escape the legal cognizance and redressal mechanism of the Government, couldn't we resort to the institutions that represent the Government Opposite to provide a market-based, financial alternative to the administrative system offered by a democratic government? The GO recommends itself for various reasons including the fact the Nominal Government oftentimes limits its economic interest to populous cities and larger towns, ignoring the vast traits in betwixt. Further, the GO, representing social, economic and geographic space excluded by the Nominal paradigm, has a publicly-recognized claim to Mint Gold, and may be deemed to be operating under a Gold-collateralized GO Cause Bond that yields FV, PV, and other lines.The G.O is also a sponsor of those economic activities that are marginally superior to lending support to public infrastructure projects (which, literally, offer an LQ-Upgrade to the Nominal citizenry for the smallest increment to GO Members).
Given the size of the GO Constituency, the magnitude of its Gold reserves, and the spatial and temporal domain of its Cause, it is prudent to vest Insurance Houses with the administration of the GO Cause Bond. Insurance Houses that offer private insurance to the Nominal economy and participate in the public nominal bond markets, would also privately administer the GO Social Cause Bond through entities of the Local Government and the NGOs. In this context, consider the Local Government (as distinct from the Federal/State nominal government) espousing a ‘Passurance Tourism’ economy in the opposite of the GO interests who advocate supporting a ‘Tourism-SESH’ society, while the Insurance Houses, albeit Bond Administrators, are staked in ’Bakey Volatility’ between the two Causes (ie, a Pareto confluence). Thus, Insurance Houses issue Gold-collateralized GO-Cause Bonds privately to Local Government entities on one hand, and the GO Community interests on the other, both opposite the public Sovereign/Corporate Bond market in which Insurers arbitrage for yield across bonds of various tenures. Thus conceptualized, the 2 entities further their interests within the private GO Cause Bond, while the Insurance Houses operate in the Public Bond market. As Administrators, the Insurance seeks to minimize Volatility in the GO Cause Bond, even as it reallocates its Bond holdings across tenures to zero out yield-sourced arbitrages in the Nominal Bond market. These Insurance Houses deem the operation of the GO Cause Bond secondary (although complementary) to their primary purpose of extending private commercial insurance in the Nominal economy. If Cause Bond resources, whether PV-financially through NGOs, or by implicit FV support of Local Government budgetary lines, funded administrative and SESH-activities in the GO hinterland, then the Insurance Houses would have the control necessary to keep public administration entities in GO constituencies on their toes, and ensure they attend to nominal externalities and impacts upon the GO. Thus, and should the Government apparatus fail in attending to Passurance-Tourism-SESH matters, or ignore (inter-jurisdictional) externalities engendered by its pursuit of the Nominal, the Insurance Houses would perceive the ’Cause-Redux’ as exacerbating volatility in the GO Cause Bond market. Since Sovereign/Corporate bonds are both Nominal, their Volatility would subside in such periods, causing Insurance Houses to defer their yield-based Bond arbitrage trades. Unable to profit off the Nominal Bond market, Insurers would choke-off Bond-Yield Arbitrage FV funds to the local governments. Instead, they'd fund the resolutions necessary to return the Cause Bond back on to its tracks by PV-monetizing the ‘Nominal Bond Bakey Volatility’ in the Gold Volatility Hedge market (shorting Gold when it appreciates with Nominal GDP growth), and routing Real-PV fund streams to NGOs that implement its correctives. Confronted by the prospect of a fund-choke by Insurance Houses, and/or a loss of governance authority, the Local Government machinery would respond more effectively in GO constituencies, or cede governance territory to the GO NGOs.
One might wonder whether the Insurance Houses have the appropriate incentives to act in the interests of the GO Community. Thankfully, and since Insurance Houses are dominant players in the Nominal Bond market, it is always possible for the affected GO Members to intervene in the Bond market with ‘Passurance/Tourism/SESH Negatives, PTSESH Negatives, (PTSESH Negatives, as defined by GO Cause Bonds, are those socio-environmental endpoints/outcomes, and those instances of policy, actions, inactions as well as violations and infractions, that cause significant, irreversible and costly-to-correct damage to GO society, it's environs and its Passurance-Tourism-SESH economic potential). These Negatives, some of which are likely externalities, trigger early, but are only taken cognizance of much later by Insurance Houses to whom the GO Cause Bond is secondary. In the meanwhile, these Negatives may be exploited by GO Members in Nominal Bond trades for their blackmail value and/or the economic opportunities embedded within until Insurance House takes NAV-Cognizance of them in the Cause Bond market. (The Negatives could also be exchanged underhand with the two opposing Cause Bond stakeholders for the Plaintiff's private gain at the expense of the less diligent/less-sensitive members of the GO society). Such speculative trading in the Nominal Bond market interrupt yield-arbitrage trades engaged in by Insurance Houses, and force them to take early cognizance of the PTSESH Negatives in the Cause Bond market. Thus, should Insurance Houses, in their role as GO Administrators, not lend a sympathetic ear to affected GO-members, and should such members have a worthy plaint as evidenced by the market-worth of the PTSESH-Negatives they hold, the latter would hold the power to extract blackmail rents in the Nominal Bond market, and cause significant losses to Insurance Houses and those long in the Cause Bond. The fear of such losses would induce the Insurance House, but also the Local Governments and NGOs to clean up their act, take early cognizance and resolve the Negatives at an early date. Thus conceived, many stubborn SESH-externalities that infest GO constituencies could be resolved advantageously and expediently.
The Nominal paradigm is a multi-headed monster that engenders many an externality, and causes untold social miseries to members of the Suppress group opposite it. A Real resolution is, hence, expressly necessary. Unlike the GO, which is an unwilling abettor to the designs of the Nominal, Insurance Houses, built on the edifice of Sustainability-sourced security, are willing accomplices of the Nominal. It is hence expedient of Insurance Houses to resolve the sustainability-violations caused by their one-sided protection of Nominal interests. The proposed design, a first step toward a sustainable resolution of the Nominal externalities and impacts, has global relevance and offers a credible alternative to the existing centralized, nominal government that enforces the will of Nominal Privates upon the Poor and the GO. The proposed strategy is opportune for Insurance House that are required to further sustainability in the pursuit of their businesses and has the potential to resolve many externalities and development crises characteristic of Nominal-directed growth in the GO hinterlands.
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