More of my philosophy about venture capital (VC) and about economic depression and about the modern monetarist school and about economies of scale and about the supply and demand rule and about the price in capitalism and more of my thoughts..

[Amine Moulay Ramdane]

Hello,


More of my philosophy about venture capital (VC) and about economic depression and about the modern monetarist school and about economies of scale and about the supply and demand rule and about the price in capitalism and more of my thoughts..

I am a white arab from Morocco, and i think i am smart since i have also
invented many scalable algorithms and algorithms..


"Over the past 30 years, venture capital (VC) has become a dominant force in the financing of innovative American companies. From Google to Intel to FedEx, companies supported by venture capital have profoundly changed the U.S. economy. Despite the young age of the venture capital industry, a fifth of current public U.S. companies received venture capital financing, and three out of the five largest companies in the world received most of their early external financing from VC. So VC-backed companies play an increasingly important role in the U.S. economy. Over the past 20 years, these companies have been a prime driver of both economic growth and private sector employment. VC-style financing is not the sole reason these companies succeeded; in fact, VC was not even the sole source of financing for many of these companies. However, large and growing fractions of entrepreneurs are choosing VC financing. These entrepreneurs think VC financing is the best way to grow their companies. That makes it clear that VC is an important part of the innovation ecosystem and has helped some of the world’s most successful companies to grow."

You can read more here in the following interesting article of year 2015:

How much does venture capital drive the U.S. economy?

https://www.gsb.stanford.edu/insights/how-much-does-venture-capital-drive-us-economy


And the mitigation and prevention of economic downturns, including depressions, involve complex factors related to economic, political, and social systems. While advancements in technology and science can contribute to economic resilience and stability, they do not guarantee immunity from economic challenges. Here are some ways in which technology and science can contribute to economic stability:

1- Data Analytics and Predictive Modeling: Advanced data analytics and predictive modeling can help economists and policymakers better understand economic trends, anticipate potential crises, and implement preemptive measures.

2- Fiscal and Monetary Policies: Improved economic theories and models, often aided by advancements in economic science, can inform more effective fiscal and monetary policies. Central banks and governments use these policies to manage economic cycles and respond to downturns.

3- Financial Technology (FinTech): Innovations in financial technology can enhance the efficiency and transparency of financial systems. This can potentially reduce the risk of systemic failures and improve the overall stability of financial markets.

4- Global Communication and Cooperation: Advanced communication technologies facilitate global coordination and cooperation. In the event of an economic crisis, coordinated responses among nations can be crucial in stabilizing the global economy.

5- Automation and Productivity: Technological advancements, such as automation and artificial intelligence, can contribute to increased productivity. Higher productivity levels can positively impact economic growth and resilience.

However, it's important to note that technological advancements can also introduce challenges, such as job displacement due to automation, increased income inequality, and ethical considerations related to the use of certain technologies.

Moreover, economic stability is influenced by a wide range of factors, including political stability, regulatory frameworks, trade policies, and global geopolitical dynamics. While technology and science can play a significant role, a comprehensive and well-balanced approach involving various disciplines and policy areas is necessary to minimize the risk of economic downturns.

So mitigating and preventing economic depressions involve a combination of policies, strategies, and systemic approaches. Here are some key areas and measures beyond technology and science that are crucial in addressing economic challenges:

1- Monetary Policy:

- Central banks play a critical role in implementing monetary policy to control inflation and interest rates.

- Adjusting interest rates, open market operations, and managing money supply are key tools used to stabilize the economy.


2- Fiscal Policy:

- Governments can use fiscal policies, such as taxation and public spending, to influence aggregate demand and stimulate economic activity during downturns.

- Countercyclical fiscal policies involve increasing government spending or reducing taxes during economic contractions.


3- Regulatory Framework:

- Sound and effective financial regulation can prevent excessive risk-taking and reduce the likelihood of financial crises.

- Regulatory bodies monitor and supervise financial institutions to ensure stability and prevent systemic failures.

4- International Cooperation:

- Collaboration among nations can help address global economic challenges. Coordination on trade policies, financial regulations, and crisis response can enhance stability.


5- Social Safety Nets:

- Well-designed social safety nets, including unemployment benefits and welfare programs, can provide a buffer for individuals and families during economic downturns.

6- Education and Training:

- Investing in education and workforce training programs helps individuals adapt to changing economic conditions and reduces the impact of job displacement.

7- Infrastructure Investment:

- Government investments in infrastructure projects can stimulate economic activity and create jobs, providing a boost during economic downturns.

8- Debt Management:

- Prudent debt management is crucial. Excessive public and private debt levels can exacerbate economic crises, so strategies to manage and reduce debt are important.

9- Political Stability and Governance:

- Stable political environments and effective governance are essential for economic stability. Transparent and accountable institutions can foster investor confidence.

10- Trade Policies:

- Open and fair trade policies contribute to economic growth. Protectionist measures can sometimes exacerbate economic problems.

11- Consumer and Investor Confidence:

- Maintaining trust and confidence among consumers and investors is crucial. Communication and policies that inspire confidence can help stabilize markets.


And it's important to recognize that economic stability is a multifaceted challenge, and addressing it requires a combination of strategies from various sectors. Additionally, the effectiveness of these measures often depends on the specific circumstances and the global economic context.


And now i will talk about an important subject and it is about the how we have to grow economy , since i think that the Democrats and Republicans in USA have two different ways of how to grow economy, since as i have just for example said that the U.S. Congress believes that today's debt will be dwarfed by tomorrow's economic growth. Driving economic growth is one way to reduce the national debt, but Congress tends to disagree on how to create that growth. Most Democrats push increased spending, while most Republicans champion lower taxes, and it looks like the different economic ways in Japan of Abenomics and Kishidanomics, and i invite you to read the following article about them:

https://cscr.pk/explore/themes/politics-governance/kishidanomics-the-economic-policies-of-fumio-kishida/


But i will also say that Milton Friedman, an American economist awarded the 1976 Nobel Memorial Prize in Economics for his contribution to consumption analysis and to monetary history and theory, including his observations of the complexity of stabilization policy, was the founders of the modern monetarist school of economics, that held that the business cycle is determined mainly by the supply of money and by interest rates, rather than by government fiscal policy - contrary to the long-prevailing view of Keynes and his followers. So then you have to understand that the modern way in economics with wich we manage inflation and unemployment is no more using keynesian economics, but it is by using for example the following way using the supply of money and by interest rates: So i think that the Federal Reserve policymakers of USA are trying to slow down the economy and subdue inflation by highering interest rates, and highering interest rates make money costlier and borrowing less appealing and that, in turn, slows demand to catch up with supply, which has lagged badly throughout the pandemic, but that's the macroeconomics of it, and its potential effects include for example lower wages, a halt or even a drop in home prices and a decline in stock market valuations.., but notice that the highering of interest rates reduces the demand, so i think it has a macroeconomic effects of balancing by creating lower prices in one side and part of the economy and this compensate much more for the higher prices in the other side and part of the economy, but notice that it doesn't mean that the highering of interest rates solves "all" the problems.


And as i have just explained, that the modern way is modern monetarist school of economics of Milton Friedman, read about it in my above thoughts, so i think that the way of the modern monetarist school of economics is also the way that we call the Quantitative easing (QE) that is also a way where for example the U.S. Federal Reserve print more and more money so that to lend money for investment, so i can also say that the borrowing of this money from Quantitative easing (QE) is an indebtedness that creates wealth, but notice that the Federal Reserve is not crazy since it has to manage it correctly and manage inflation correctly.


So i think i am a new smart philosopher and you can carefully read my new ideas of my philosophy in the below web link , so i have just talked about economies of scale in my below previous thoughts , but now i will talk more about economies of scale since i think that it is a so important subject , since it is like energy production in nuclear fusion or the like ,
i mean that so that to be efficient , the nuclear fusion output has to be greater than what we give as energy in the input , so i think that it is the same for economies of scale , i mean when you are efficient in economies of scale by for example using technology and science , you can for example make the output of the system greater than the input of the system, so i think it is also the way of lowering the price and becoming competitive , so i mean you have to higher productivity by using for example artificial intelligence and automation , and i think that the abstraction of it is also the following:

I think i am highly smart since I have passed two certified IQ tests and i have scored above 115 IQ, and i mean that it is "above" 115 IQ, i think i am discovering other patterns with my fluid intelligence about decentralization and about scalability of productivity, and it is that you have to take care of the "coherency", and i think that the coherency is quadratic in a complexity of O(n^2), and it is not like contention that is in a complexity of O(n), so it is why you have to know how to decentralize efficiently so that to lower the complexity of the coherency, so there is not only specialization in a job in what you do better that higher productivity and quality or the part-time employment that can higher productivity, since we know that a 10% increase in the part-time share is associated with 4.8% higher productivity , but there is also the efficient decentralization and the efficiently lowering the contention and efficiently lowering the coherency.


And now about the subject of automation:


"A study by researchers from MIT and Boston University claims that automation is responsible for more than half of the increase in the income gap between the most educated and the least educated workers in the United States. The study estimates that automation reduced the wages of men without a high school diploma by 8.8% and of women without a high school diploma by 2.3%. These figures have been adjusted for inflation. According to the study by Acemoglu and Restrepo, growing income inequality could also stem from, among other things, the decline in the prevalence of unions (a highly sensitive topic today in technology companies), market concentration resulting in a lack of competition for labour, or other types of technological change.
Acemoglu and Restrepo's study comes at a time when the debate over whether or not to tax robots is heating up. More and more voices rise to call for a tax on robots to combat the effects of automation on income inequality. In this regard, a study published last month by economists at MIT suggests that introducing a tax on robot labor, preferably a modest tax, would incentivize companies to retain workers, while offsetting some of the payroll taxes lost through downsizing. Of course, the conclusions of the study are not unanimous.

According to economists' calculations, an effective tax on robots would probably be between 1% and 3.7%. The report estimates that if the tax is much higher, it would exaggerate the role that robots play in the operational routines of companies; and if it is lower, companies would have no incentive to retain human employees at all."

Read more here (and you can translate the web page from french to english):

Study claims automation has caused more than half of US income inequality since 1980

https://embarque.developpez.com/actu/340711/Une-etude-affirme-que-l-automatisation-est-a-l-origine-de-plus-de-la-moitie-de-l-inegalite-des-revenus-aux-Etats-Unis-depuis-1980-les-personnes-les-moins-diplomees-semblent-les-plus-touchees/


And following are some of the important advantages of automation:

1. Automation is the key to the shorter workweek. Automation will allow
the average number of working hours per week to continue to decline,
thereby allowing greater leisure hours and a higher quality life.

2. Automation brings safer working conditions for the worker. Since
there is less direct physical participation by the worker in the
production process, there is less chance of personal injury to the worker.

3. Automated production results in lower prices and better products. It
has been estimated that the cost to machine one unit of product by
conventional general-purpose machine tools requiring human operators may
be 100 times the cost of manufacturing the same unit using automated
mass-production techniques. The electronics industry offers many
examples of improvements in manufacturing technology that have
significantly reduced costs while increasing product value (e.g., colour
TV sets, stereo equipment, calculators, and computers).

4. The growth of the automation industry will itself provide employment
opportunities. This has been especially true in the computer industry,
as the companies in this industry have grown (IBM, Digital Equipment
Corp., Honeywell, etc.), new jobs have been created.
These new jobs include not only workers directly employed by these
companies, but also computer programmers, systems engineers, and other
needed to use and operate the computers.

5. Automation is the only means of increasing standard of living. Only
through productivity increases brought about by new automated methods of
production, it is possible to advance standard of living. Granting wage
increases without a commensurate increase in productivity
will results in inflation. To afford a better society, it is a must to
increase productivity.


I have not talked about the supply and demand rule that governs the price in economy , so here it is: so if the quantity demanded is greater than the quantity supplied , in this event, consumers would choose to pay a higher price in order to get the product they want, while producers would be encouraged by a higher price to bring more of the product onto the market, and if the quantity demanded is lesser than the quantity supplied , producers would be willing to take a lower price in order to sell, and consumers would be induced by lower prices to increase their purchases , so this dynamic of the price caused by the supply and demand has as result that it can converge to a price equilibrium.


And I have quickly taken a look at Amazon profit margin and ROI(Return of investment), and i think by being a seller of Amazon(or the like) products you can become rich, since you can buy in more quantity so that to lower the price of an Item of Amazon, so it is also better for you to have more money when you start selling Amazon products, and after that i think that you can use Amazon shipment strategy that easy the things for you , and so that to "also" lower the Risk, you have also to know that in most cases, customers(that i think can be sellers of Amazon products) can request returns within 30 days of receiving their order,


And according to the National Council of Real Estate Investment Fiduciaries (NCREIF), as of Q1 2021 , the average 25-year return for private commercial real estate properties held for investment purposes slightly outperformed the S&P 500 Index, with average annualized returns of 10.3% and 9.6%, respectively. Residential and diversified real estate investments also averaged returns of 10.3%, and i think that a good ROI for a rental property is usually above 10%, but 5% to 10% is also an acceptable range. Real estate investing can be lucrative, but it's important to understand the "risks". Key risks include bad locations, negative cash flows, high vacancies, and problem tenants. Other risks to consider are the lack of liquidity, hidden structural problems, and the unpredictable nature of the real estate market.


And I have just talked about the mechanisms that make the efficient allocation of resources in capitalism , and you can read about them below , but now i will talk about the price in capitalism , so i think that the price in capitalism follows the supply and demand rule , for example as the price rises, suppliers are willing to produce more and at higher prices, since for example if prices rise, additional suppliers will be enticed to enter the market, so this kind of competition can have a tendency to lower the price , so competition is the first important mechanism , but there is another important mechanism in capitalism that we are noticing in our era and it is the economies of scale , since economies of scale are cost advantages that can occur when a company increases their scale of production and becomes more efficient, resulting in a decreased cost-per-unit. This is because the cost of production (including fixed and variable costs) is spread over more units of production, so notice carefully how economies of scale have lowered the price of many products and services , so as you notice that we have to be optimistic by looking at those two mechanisms in capitalism that lower the price.


So i think i am also a new smart philosopher and you can read my new ideas of my philosophy below , but now i will talk about an interesting subject , so i am discovering some important patterns with my fluid intelligence , and it is of that of the efficient or good allocation of the resources , i mean that in economy , the specialization in what we do better permits to more efficiently allocate the resources , so you have to know how to specialize where you have strong aptitudes so that you be efficient , other than that , there is another pattern that i am discovering with my fluid intelligence and it is that the competition for the reward also
allocates more efficiently the resources , i mean when you are not competitive , you have for example to think to change your specialization for another specialization where you are more apt and competitive , other than that , we find the same pattern in finance that permits to more efficiently allocate the resources , since the biggest benefit of finance, is to provide opportunities to people, in the sense that in a world where there is no finance, the only way to start a company is to be born rich or to have saved for a long time. In a world where finance works well, the people with talent can actually start firms and reach their dreams without waiting to either have saved the money, or be lucky and receive it from their parents, and once you create this opportunity, you will have the most talented people take advantage of those opportunities, which favors growth, which favors a good allocation of resources and, ultimately, innovation. So then i can say that the mechanisms such the specialization in what you do better and the competition for the reward and the finance that creates opportunities for people have the tendency to self-organize the society so that the resources be efficiently allocated.


And i invite you to read carefully my previous thoughts in the following web link:

https://groups.google.com/g/alt.culture.morocco/c/tK2ZLpmK3b4



Thank you,
Amine Moulay Ramdane.