Sovereign Economic Model

Climate Change vs Sovereign Economic Model


Climate change is constant, as Earth is a living organism and things change, depending on solar radiation, earth axis(magnetic pole shifts) and eventual catastrophic natural disasters like volcanic eruptions which can severely block sun radiation.

But the biggest threat of climate change is as buzzword of a fear mongering narrative, which is used to scare people, and push big shifts in technologies, laws and taxes, and mostly to, reward or punish people, businesses and whole countries.

We already know that climate change will be used to disrupt trade, by taxing fossil fuel and other perceived "dirty" "non-green" natural resources. Probably there will be also taxes and regulation for countries and companies which are not perceived as "sustainable"or because of excessive greenhouse gas emissions. Taxes and wealth will be distributed to companies and countries which are in compliance. One can see the Tesla example which sells "green credits" to more conventional car makers.

I  believe that the Sovereign Economic Model is definitely the way to go for emerging countries, precisely for the climate change issue.
A nation has to take advantage of its land, natural resources and context, in order to satisfy the need of business, people and state.
So unreasonable impositions for climate change should be rejected if it imperils the sovereignty of the people and the state. Not every industry sector can be made in complete sustainable or clean way. And an country which gets industrial goods in a third country does not mean it is climate friendly, as the country also raises demands for goods because of consumption.

I believe the right way is both adopting the Sovereign Economic Model, but also try to protect the environment as much as possible, not as afterthought, a buzzword, but with technical tools and scientific effort.

EU vs Sovereign Economic Model


The Sovereign Economic Model is a stalwart for sovereign economics of a state.

EU is a centralizing black hole: EU has such a bureaucracy in place to remove sovereignty from countries in order to create a political "union".
This overflows to economics, where the EU:

1) regulates what and which countries can do,which cannot
2) has quotas for food production (e.e. milk)
3) forbids some local foods
4) distributes economic "tasks" to EU "favourite" countries, while forbidding other countries to implement them
5) limits state capitalism (while the Sovereign Economic Model encourages it)
6) de-industrializes poorer countries by shutting down local companies
7) favours large companies with huge lobbying budgets
8) removes competition as 6)7)
9) direct support to designated companies only


Sometimes I feel pity for European countries being handicapped by EU bureaucracy, and the instalment of EU nominated companies with related loss of competitiveness, will cause the complete defeat of many industries by more eager less bureaucratic Asian countries.

Why the Sovereign Economic Model is better than WTO trading system


There are many criticisms of the WTO, there is even a dedicated page
https://en.wikipedia.org/wiki/Criticism_of_the_World_Trade_Organization#:~:text=Yet%20several%20criticisms%20of%20the,corporations%2C%20undermines%20local%20development%2C%20penalizes

It says:
-only serves the interests of multinational corporations 
-undermines local development
-penalizes poor countries
-is increasing inequality
-restricted access to food and healthcare
-market distortions cost developing countries $700 billion annually
-encouraged the growth of neoliberalism
-aggravated the divide between the Global South and North
-breaking down the rural population
-issues of labour and environment are steadfastly ignored
-resulted in reduced welfare for developing countries


WTO rules are beneficial for large trading companies and countries, but extremely disadvantageous for developing countries with "infant" (developing) industries and societies. Strong rich countries have many levers to influence WTO policies or countries themselves, while the poorer and smaller countries are forced to go along.

The Sovereign Economic Model, in contrast to the imposed trading rules by WTO, strives to create a more sovereign economy, for the state and its citizens, using tools such as state capitalism, industrialization, import substitution, market regulation, support for agriculture and small manufacturing business. It's aim is the support and structuring of the economy to better suit the country.

Sovereign Economic Model and Japanese-style economy


One of the ways Japan build its post-war economy was a peculiar method on how they organized both internal competition and exports.

1) In the internal market, Japan applied strong protectionism to impede imports from foreign firms.
2) They selected a number of national champions (usually between 5 and 8) with a similar structure of suppliers
3) National champions competed furiously for market share, without one ever grabbing a too big share
4) As result of this fierce competition, the Japanese companies became competitive in the international market
5) The companies began to export, not individually, but as a syndicate -in a collaborative way- to gain critical mass

Japan had huge success with this stratagem. Also Keiretsu - which is a Japanese term, for a strong relationship, even mutual equity stakes between a group of companies - is a strong bond when working and trading internationally. This system is still in place in the Japanese economy.

I believe a sovereign economy should consider the Japanese method of building up entire industries, it has worked before successfully and can work now.

The Sovereign Economic Model - Political considerations


When I was developing the core economic concepts of the Sovereign Economic Model (http://www.sovecomo.ru/post/2021/03/01/The-Sovereign-Economic-Model-whitepaper-PDF) I was focused exclusively on the economic theories on how to strengthen the economy.

But slowly it dawned to me, that it implicitly contains  many political elements, not because of my personal political inclinations, but because economic control implies also political influence.

As with any type of sovereignty, it means the country controls processes within its borders.

In economic terms, economic sovereignty means a country controls the money flows within a country. When someone else outside a country controls food, medicines, electronics, industrial production, energy, media, military hardware, land ownership and other main businesses it means a country is not in charge, is not sovereign.
Therefore the Sovereign Economic Model implicitly tries to reverse such external control, though state capitalism,import substitution, market regulation, industrialization and tries to move the economic control levers back to the country and its people.
The Sovereign Economic Model also has a more long-term view of the well-being of the economy, in terms of independence, self sufficiency and stability while capturing and retaining the wealth created in the country.

It is obvious that increased competition is not a welcome concept for many of the largest international industry players and countries with such industries. It is therefore criticized, despised and ostracized both in media and academia by most economic experts and stakeholders.

It is sad to see that only a few countries like China, Russia, India(partially), Iran and few others are capable of having sovereign economic policies, while others willingly or unwillingly gave up economic control of their country, which is economically negatively impact their economies in the longer term.

Sovereign Economics in the Sovereign Economic Model (Summary)


A summary of concepts of a sovereign economy. If you follow the links below, please enable a translator in browser, most posts are written in Russian.


State Capitalism for strategic sectors
Value creation from natural resources
De-financialization
Import substitution
Technology acquisition
Strong support for Mittelstand producers - SMEs(De-taxation)
Market regulation(market share limitations)
Sovereign Agriculture
Sovereign Internet and E-Commerce

In case you have missed it in previous posts, the pdf of the “Sovereign Economic Model” is at http://www.sovecomo.com/The_Sovereign_Economic_Model.pdf

Sovereign Economic Model : Build vs Buy: Knowledge Acquisition


What is the best way to acquire knowledge to master new technologies and production and begin Import Substitution?


Buy

  • Buy a company
  • Buy a technology(Intellectual Property Rights)
  • Make a JV -Joint Venture

Build

  • Hire specialists/consultants
  • Internal R&D


Contact us @ SOVECOMO.COM and let us help you

Sovereign Economic Model VS State Capitalism


In the Sovereign Economic Model the role of the state is:

  • in control of natural resources(including land, forestry, water), similar to the Georgism economic theories
  • in control of strategic infrastructure for sovereignty/security reasons
  • in control of strategic companies(natural resources, finance, military,industrial) for sovereignty reasons
  • as main promoter/investor in certain sectors of business to promote research, innovation and growth as practiced in many East Asian countries
  • very liberal in consumer markets/small business,it promotes the limitation of market share in order to promote many players entering a market and making the economic more competitive and healthy 

In (pure) State Capitalism the government is severely limiting private business and trading. This severely limits business activity.