Sunday, March 9, 2014

The Inflation Horse has bolted...Take over the reins !

The Inflation Horse has bolted...Take over the reins !



Ganga Prasad Rao
gprasadrao.blogspot.com


Inflation has been the cry baby of Indian politics. The more attention
it receives, the more entrenched it becomes in the economy. And for
good reasons. Does a cat ever turn its back to butter s'mores? Or a
politician to another term? So, and despite the long delay post which
Inflation-indexed bonds, IIBs, have seen the light of day, why would
we expect FIIs and our domestic financial entities to shy away from
systemic loot that inflation still is? Little surprise, then, that
inflation has galloped away at a double digit decadal average. But
while 12% inflation was deemed tolerable without the IIBs, 10%
inflation is not with them around. Is that why, and anticipating a
turnaround in the economy, the inflation-lovers have changed strategy,
and rather than seek inflationary gains against the IIB tides, chosen
to turn the control over to the victims - us voting citizens?

Read the papers lately? .....Rajan, our RBI Governor, has suggested
Parliament choose an appropriate inflation target, and PC, the Finance
Minister, has queered the pitch by further suggesting it be the Lok
Sabha. I wonder whose viewpoints they are airing? Not the FIIs caught
in the chasms of uncertainty between the inflation-friendly government
of the past decade, the 'Modi saffron wave' or the 'Hazare doldrums'
of the future? Why would they risk an inflation-tolerant RBI that
triggers violent and widespread public protests against
runaway-inflation in an already hostile political situation when the
soon-to-be elected ignoramuses are perfectly capable of ruining the
low-inflation IIB cake themselves? Why not, instead, shift the onus to
the people themselves, put FII lobbying dollars to work in the divided
Parliament as it debates an inflation target by crowding out economic
priorities of the new Government? Besides, the RBI too wouldn't mind
the diversion, attracting as it would otherwise, the flak for not
containing inflation despite the IIB regime kick-off (and the less
said of ethical conflict of interest in implicitly or otherwise
targeting a certain inflation rate despite its market-setting monetary
moves and cross-border financial interests, the better).

So.......should we move decisions on inflation from the hands of our
bureaucrats and trust them with members of Parliament who, even
otherwise, have little time for anything significant? And pray how
will they judge the issue? Burdened on one hand with the task of
sustaining growth and creating employment, and on the other, beholden
for campaign funds to the very interests that seek inflationary gains,
and not entirely oblivious to the potential for inflation-stoked
profits in the equity markets, these politicians are least likely to
take on inflation; in fact all indications are they will play along,
perhaps even worsen the situation. Why, a fractious debate on
inflation might well bring down the government! So, is Rajan playing a
master stroke in seeking to transfer the decision on target inflation
to the Parliament and its democratically-elected representatives? Of
course.....and expediently at that! Is it also a conspiracy to
leverage the economic insecurity of the masses and the ever-present
macro trade-offs to ramp inflation up without attracting political
flak for it? Possibly. Will it permit the inflation-mongers to get
away with their three-fold rise in prices from the turn of the
century, if with a slightly less steeper rise in the future (when they
should have been halved to start the new FDI-IIB regime)? In all
probability, Yes.

Quite apart from the question how much Gold and IIBs middle-classes
families should buy and with what sacrifices, is the question, who?
Who makes the decision as to what is an appropriate inflation rate to
target, and how? That is, if we don't want inflation to crowd out all
other issues worthy of the attention of, and be exclusively determined
by our Members of Parliament. The stakes being as high as they could
be, perhaps it is appropriate to consider an entirely new design. How
about one that vested control of inflation amongst a select group of
paired-institutions that were major participants in the various
sections of the market - the very short, VSR, the Short run, SR, the
Medium run, MR, the Long run, LR, and the Very Long run, VLR; a design
that permitted these institutions with vested interests to seek an
inflation rate consistent with their perspective, resources and
constraints?

Consider toward such a design, the RBI in opposition with the FIIs in
the VSR compartment, the Lok Sabha-Rajya Sabha in the SR, Households
against Banks in the MR, Insurance firms battling Pension Funds in the
LR, and Sovereign Funds engaging Realty funds in the VLR. The RBI and
FIIs seek in the VSR an inflation target that keeps the foreign
exchange rate stable and range-bound given their repo-, reverse repo,
hedging and overnight fund operations. Too low an increment to
expected inflation and the FX Futures and Forwards lurch dangerously.
Too high, and the FII fund flows dry up causing liquidity concerns at
home. The equilibrium inflation expectation generated in this 'duel'
is a compromise between domestic and foreign monetary entities, albeit
expressed through domestic and foreign financial interests. Elsewhere,
the two Houses of the Parliament, given the short-run impact of
inflation on real employee wages & employment on one hand, and upon
firm profits on the other, seek opposing directions to inflation, and
arrive at a short-run political compromise on inflation. In the medium
outlook market, Households holding IIBs and Gold inflation lock horns
with Banks hoarding Gold and invested in equities. Should inflation
expectations spurt, risk-averse Household move away from Gold and in
to IIBs while risk-tolerant Banks, fearing rate hikes, sell equities
to buy into the security of Gold. By their reactions to inflation
expectations, they determine an appropriate inflation target that hold
Gold prices stable. This represents an inter-temporal perspective on
inflation from across the risk-spectrum. The Long section of the
market has Insurance Houses that seek zero-inflation and who are
sellers in the IIB market, taking positions opposite Pension funds
that buy IIBs and implicitly support inflation. The resulting
inflation compromise defines the extent of inflation acceptable to
these long players. Finally, and in the VLR market, the Sovereign
Fund, constituted of long bonds, engages Realty funds to determine a
mid-way 'nominal compromise' that, on one hand, permits inflation to
reduce the perceived cost of capital, and on the other, preserves the
nation's future with inflation-induced Consumption gain-cum-loss of
Savings that motivate the volatility necessary for Realty funds to
raise capital and manage their operations.

For the pedantic, the above is not unlike a set of 'Minimize
SSE-criterion' -type simultaneous equations in horizon-segmented
markets with target inflation as the decision variable. The equations
would describe inflation incentives/disincentives and trade-offs
between opposing players in markets with various horizon. Since these
markets with different horizons must eventually converge to a
multi-market equilibrium in expectations, ie, a common inflation
target, it is reasonable to use the figures from the 5 markets as
alternative estimates of optimum inflation and obtain from them, a
range, even a central tendency for target inflation. The measure would
have widespread credibility and abundant support from nearly all
sections of the society, drawing as it would upon outlooks,
information, incentives and market reactions from different sections
of the globally-integrated economy.

.....And yes, our politicians may return to slogans, brickbats,
chairs, and what not to make their non-inflationary point.

Neieieieighghgh !

--
Ganga Prasad G. Rao
Aparna 19 New, 30 Old Janakiram Colony
Arumbakkam, Chennai 600106
gangaprasad.rao@gmail.com
gprasadrao@hotmail.com
http://myprofile.cos.com/gangar

Friday, February 14, 2014

Free Media in a Democratic Nation? Really? - A Pre-Election Special !





Free Media in a Democratic Nation? Really? - A Pre-Election Special !

gprasadrao@hotmail.com


The TV Media is at it again. Fomenting political divisions - real and imagined, projecting mood swings and vote shares, even  alternate party alliances to suit viewer tastes in the masses. But as different they are, or seek to be, most harp on common, familiar themes: Dynastic politics, Personality politics, Judgement Day rhetoric, and even Voter ignorance, if not apathy. Let us examine them each.

Those were the days when a united India resonated with the vision of Patel, Nehru's leadership, Gandhiji's steely resolve and the patriotism of Sarojini Naidu. There was but one primary, over-imposing concern among the masses - Freedom. 67 years, two wars, and three assassinations since, and for good or bad, we are today an over-populated democracy skirting the fine line between spiralling unsustainability and a ramp to the future.

But, as incongruous as it may seem, some things never change. Dynastic politics has not disappeared, it is today more widespread, and perversely, even accepted by the masses. Political capital and family trust and goodwill, are apparently worth something across generations ! The case for personality-based politics, however, is weaker. India, today, is a globally-integrated nation - almost. Our businesses have invested abroad, we have exported business leaders beyond automobiles, and indeed are more open to foreign technology than ever before. But this capitalist, market-based revolution has brought with it a plethora of new issues and problems - from land-use and over-stretched natural resources to public safety and pollution, enlarging financial- and hierarchical-inequity to educational injustice, and a society that is yet gender- biased, over-populated and unsafe. And while the media does debate them, our leaders are, by and large, silent on anything that might anger big businesses, the friendly Sheikhs, or the unfriendly capital markets. Campaigns are long on promises and vision, but short on well-defined policies. Our political parties claim to fill the entire spectrum from Right to the Left, (and I am no believer in populist subsidies in an over-populated nation) but show me a party that says Left-Green and means it with policies. Perhaps Personality-based politics is but a cover for what political parties don't intend, can't achieve, and don't wish for the people to enjoy? So why is the media glorifying it with personality-based coverage.

These past few weeks have been hectic on the airwaves, what with the media channels competing for viewer attention. And it is even prudent to evaluate the performance of the Government on its track record and promises. But should that inquiry extend to the exhumation of the distant past, of assassinations and shamefully-inhumane venge-riots that etched into our memory and the nation's history. What and whose purpose does the exhumation achieve? True, the assassination changed the course of the nation as did the riots reduce the families of victims. But to time and exhume them to re-ignite cooled-passions, recharge the anger and sway the masses - educated ones at that - into altering their vote prior to the projection of the electoral outcome? No ulterior designs...or sponsors, I hope. And while at it....Did I miss a prime-time on the Population issue? Or, Transportation-related accidents and fatalities? The impact of RTI on equity in school admissions? An answer to the 'Diesel-soot in your face' problem? Holding back 'save-you-money' energy technologies to subsidise inefficient and failed energy technologies? Economists label it 'crowding-out'; apparently, the media is well aware of it. Focus on a deep wound of the past while pushing back and ignoring the real issues of today, and risks of the future.

And if the media is indeed the cop it claims to be, why does it not reveal the issues with the 'real-moolah'? Inform us the no-war 'Hangseng deal' the Congress and the Opposition made with the Chinese. Is it set to expire, come May? Inform us the politics around the India-Pak-Iran gas pipeline. It wasn't held back for supplies from Cove Point, MD? Reveal the economics and policy  behind grid-based and wind power. It wasn't held back in a zero-sum against solar? Tell us about unholy electoral adjustment behind the scenes (beyond accommodating and hedging in one another). Reveal who post-processes the votes, and in whose presence. Be they Country-Directors of the World Bank and the IMF or CEOs of FIIs. Reveal to us the politics of delay and timing that has reduced POSCO@Odisha to a question-mark, the belated issue of Inflation-bonds, even the timing of the connecting the Northern power grid to the Southern grid. Surely, the delay was entirely administrative? If it filled the baskets of the less-efficient technology resellers and party coffers, you wouldn't call it Corruption, would you? Or the wilful participation of the media?

The media is an instrument of democratic free expression. It should take the people's cause, the real and everyday problems they face, inform and impartially educate the public, and stand by them. Let it not turn slaves to the designs of the Rich and powerful and serve the interests of the minority- for that reduces India to a puppet of the Rich, and a country of docile slaves.

Democratic though !




Sunday, January 19, 2014

Democracy Redefined (and the Macro-economy Reconstituted).....Ready for it?



Democracy Redefined (and the Macro-economy Reconstituted).....Ready for it?

Ganga Prasad Rao
Energy-, Environmental- and Mineral Economist
 
  

Introduction

It has been said before, but that should not stop one from repeating it. The lay person gets used to anything - the malaise in the social system, the polluted commons and the continuing assaults upon it, and indeed, the endemic corruption that has subverted the people-elected democracy. Add to this an obsolete and improperly-designed electoral system, the corrupt politicians ‘elected’ by which sell the nation with its nominal economy to PV-capitalists abroad, and what you have is an unsustainable society mired in slush, unmindful of the quicksands that lie ahead. In short, a society whose ‘democracy rainbow’ has been short-changed to a (less than) zero-sum against its own future.   

Our majoritarian democratic system, as it exists, provides but one channel - the once in a five year ballot - to transmit citizen preferences, their plaints, aspirations and expectations to the political parties in the fray. The Ballot has, seemingly, little relevance for issues beyond the equity concerns of citizens and their families. Though nominally equal citizens before law, the existing democratic system does not formally take cognizance of the particular expertise of its citizens - in fact a tragedy given the enormous resources invested to develop the human resources of the nation. This lacuna is exploited to the hilt by the domestic industry and capitalist special interests who either exploit or bypass academics and professionals, fund elections to exact their flesh as policy favors post the formation of the government, or, choose the more obvious shortcut, and indulge in Corruption and Largesse politics. While electoral reforms have been centre stage for decades, they have largely focused on the voting system and electoral funding issues. However, the challenges posed by the current system of governance cannot be resolved exclusively by electoral reform. For no electoral reform will bring about a system that integrates the nation’s intelligentia in to policy decision-making….or, force politicians to explicitly consider the future price of their current, politically-motivated, expedient choices.

In this blog, I propose a unique system of governance that builds upon representative democracy and politics as we know it, but which emphasizes active and participative decision-making by the nation’s crusaders and the intelligentia (who constitute a ‘Judge Council’, an evolution over the Graduate Council). The proposal is FV-focussed, forces the Industry and Political parties to pay a price for the sustainability ‘externality’ they cause from their self-serving interests, and seeks to bring about a compromise between equity and efficiency themes while accommodating diverse, even polar political and financial interests in a flexible and efficient design centered around sustainability. It is designed as a credible supplement to election-based governance that exploits its base of human resources and provides the much-needed platform for participative democracy.

Institutions
The proposal is frugal on the institutions necessary beyond the existing. It envisages a Sovereign Fund Administrator whose investing horizon spans across centuries, a Planning Commission, entrusted with the long-term, multi-decade planning, and democratically-elected Governments with a shorter horizon. These institutions are complemented by the Industry Association, the body of Industry experts, Academics, Intelligentsia and Social crusaders/leaders, as well as Environmental groups. (Bankers don't need an introduction!) The proposal supposes the existence of a mature FV-PV capital market as also a ‘Personal Sharia Exchange’, managed by a PSE Administrator, who manages the personal and professional diligences of experts.

The Stratagem
Conceive of the SGDP as the maximal FV, long-run, inter-temporal GDP path that embodies a societal compromise – a judicious combination of the two sustainability indices that maximizes the nation’s FV as measured by the exchange rate of the domestic currency against the SGDP currency, the ‘SM Yen’. The SGDP represents a set of net-sustainable, equity- and efficiency-oriented activities (and activity levels) that yield an optimal, long-run growth rate which preserves the economy’s options and maximizes the nation’s FV; ie, a sustainable compromise path between the extremes sought by the Industry and Social/Environmental organizations. Deviations from the SGDP trend either way toward the PGDP production-intensive economy, or the NGDP equity-oriented economy, reduces the nation’s FV and weakens the domestic currency.

In the absence of political pressures or expediency, the ‘SGDP Compromise Economy’, advocated by the Planning Commission and Sovereign Fund, would guide and underwrite planned activities for the year upon which the Government would then propose its budget. However, prudence demands deviations from the SGDP be explicitly provided for to accommodate political, economic and social realities. Environmentally unsustainable deviations from the SGDP take the form of ‘excess’ industrial activity that constitute PGDP activities, which could be thought of as positive deviations, PGDP points, from the SGDP. Similarly, unsustainable equity and environmental deviations such as freebidies, large subsidies, unjustifiably stringent environmental standards, high minimum wage, lowering income-, consumption- (and wealth-) taxes with a populist agenda, large unemployment and health benefits, constitute activities that count toward ‘NGDP’, or negative deviation points from the SGDP. The two are correlated inversely; while PGDP activities are profit-seeking, capital-intensive, capital market-friendly and 'GDP- and Environment-using', NGDP activities are social equity-oriented, (labor-using) and 'Environment-saving'.

Next, conceive of the Sovereign Fund and the Planning Commission issuing, respectively, Social Sustainability Bonds and Environmental Sustainability Bonds – multi-tiered, objectively and quantitatively-measured and index-driven, zero-coupon, non-tradable, rolling tranches of multi-decade long bonds that seek to achieve exacting benchmarks of social-, and environmental sustainability, and which cover and insure for the unsustainabilities inherent in the PGDP and NGDP activities. Exploiting their ‘Cause-cum-Debt’ characteristics, and to avoid a conflict of interest, the two entities cross-issue upon them tradable Eqcoins and Envcoins – currencies that price the expected terminal value of the two bonds, which in turn reflect the probability of achieving the respective ‘Causes’. EqCoins appreciate when ‘EqInvestors’ expect the Government to fast-forward equity programs (by boosting NGDP policies and activities). Envcoins appreciate with the projected FV gains from index-enlarging environmental enhancements. These social-equity and environmental sustainability currencies are the price the politicians and the industry pay to fast-forward and/or reduce sustainable FV possibilities in to (expedient) PV programs directed at improving the lot of the poor or enriching the capitalists. Both EqCoins and Envcoins are tradable in the FV-PV market where the exchanges reveal the trade-offs between anticipated equity/efficiency deviations and the impact upon ‘PV-Lifestyle’ or ‘FV-Sustainability’. The absolute and relative values of Eqcoin and Envcoin prices across markets guides policy-makers toward a social-, environmental- and economic compromise that retains its long-run focus on achieving the SGDP path.

Deriving from Cause-bonds issued by legal authorities, EqCoins and Envcoins imbue assignees the explicit authority to judge formal and legal, socially-weighty, inter-temporal issues that determine the future of the masses. Their initial assignment is critical to the success of the strategy. To conform with existing norms of democratic representation, and yet provide for an alternative mechanism for decision-making and governance, consider a simple rule for apportioning the Eqcoins and Envcoins. The coin-issuers, hold back a ‘free-float’ of the coins for facilitating trading on the FV-PV Exchange, and divide the rest proportionately between, on one hand, political parties, and on the other, the PSE Administrator, depending on the Voter turnout (and the number of NOTA and invalid votes). In a NOTA-free, 100% turn-out election, all coins would be deposited with political parties in line with their vote share. Political parties would then be free to assign them within and without their organization. Should the voter turnout fall, or the number of NOTA and invalid votes enlarge, the same results in more of the Eq/Envcoins being assigned to the PSE Administrator, who in turn, uses a quantitative and public formula to assign them to PSB-bonded Judge-Experts. EqCoins are assigned to social activists, social-crusaders, journalists, political leaders, and other socially prominent persona. Envcoins are distributed broadly among economic, financial and environmental/scientific/technical experts in the academia and beyond. The NOTA option and the coin-assignment rule-of-thumb offer citizens a credible alternative to traditional voting - a choice between placing their trust either with one (or more) political parties, or the body of Judge-Experts.

The question, at this juncture, is the criterion by which these EqCoins and Envcoins could be distributed amongst the body of experts of various affiliations. In the context of the weight attached to the decisions made by Judges – decisions concerning potentially irreversible judgments on the future of the society, it’d be appropriate to ensure assignees are personally and professionally diligent, beyond being academically and/or socially worthy.
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Consider, toward that end, ‘Personal Sharia Bonds’, PSBs. These very low, but rising interest rate personal debt bonds represent the PV monetary equivalent of the bonded’s (Sustainability Judge Candidates) past and present life deeds and wage-uncompensated professional FV contributions as also their social Achievements, Status and Diligences. The PSBs are issued by a ‘PSB triad’ consisting of a family banker, religious authority, and a legal entity, to ‘Sharia Net-Protectors-Participants’ Judges (SNPP Judges) who monetize and hold as debt the unforgiven past life sins and crimes in the issued value of the PSB. They also hold the bonds for the ‘good keys’ of the bonded (as revealed in ‘Birth rounds’. See GP Evernote 'Birthday KeysKiss') until he pays away the outstanding sin-debt. The Bonded may, at all times, trade away their ‘good keys’ held by the SNPP Judges to pay off the outstanding sin-debt. The proceeds from the initial issue of PSBs funds a compensation pot to pay away those wronged by the bonded, and the residual, if any, strategically offered as a ‘prize-payout’ to the Bonded’s First Enemy. PSBs are held and traded within the SNPP judge group, who may exploit the good keys of the bonded until they seek employment, at which point those keys are returned.

PSB coins, are person-specific ‘debt/sin currency’ issued on PSBs. These are issued just before the bonded seeks employment; the issual being facilitated by benchmarking PSB NAVs and freezing PSB trades thereafter. The  NAV of freely-traded PSB coins represent the PV of  the expected terminal value of PSBs, which, beyond measuring diligences, also covers the probability of ‘default’ (defined as the Bonded ‘giving up’ on his attempts to pay away his sin-debt), and the expectation of FV contributions by the Bonded that raise the terminal value of PSBs issued upon him. Should default occur, it causes the Sharia Protectors to terminate the bonds and cocoon the bonded’s PSB debt and his good keys for another life; the bonded being offered a ‘Bench’ or a ‘Pyrrhic Satisfice kar’ for the life. Post the redux of the sin-debt, the value of PSB Coins is determined by uncompensated FV-creating professional achievements and social contributions. Rising in NAV and turning in to ‘Judge Asset Coins’ (JudgeCoins) when positive FV achievements overtake the sin-debt, they fit the bill, so to say, for serving as the criterion by which EqCoins and Envcoins could be assigned among members of the Sustainability Judge Council who volunteer (or, are ‘involunteered’) in to the Sharia net as part of their status and diligence requirements.
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Essentially, only those who have achieved academically and professionally, have contributed to societal FV, who are diligent and in appropriate status, may stake their Judge keys and seek EqCoins and Envcoins that endow them with the right to judge issues. Given a ranked PSB JudgeCoin list, the PSB Administrator assigns EqCoins and EnvCoins to contenders by their rank – disproportionately favoring those high on the list. These assignees, representing a diverse assemblage of advisors, experts, academics, activists and crusaders (even witnesses and victims) from across the society are favored with EqCoins and Envcoins, and, may either attach them to their opinions and proposals, or adopt one of the several below-indicated alternatives available to them.

Those not in the favoured list of JudgeCoin assignees may yet aggregate together in to a ‘Rest of the Group, ROG’ and publicly critique opinions and decisions of-, and submissions by the Judge Council. To cover the indiscretions and lack of diligences of its members, the ROG volunteers a 'Group E 2' with its opinions. The ROG is also active in the Judgecoin market to buy in to Judgecoins that permit it to monitor the performance of the various Judge-Experts. Seeking at all times to hoard the JudgeCoins of those significant achievers among Judge Experts and dump non-achievers, the ROG, offers in, deserving cases, a ‘Judge Retire’ key, funded by its surrender of the Judgecoins issued upon him. His or her vacation creates space at the bottom of the Judge Council pyramid which members of the ROG seek to fill.

The assignees favored by the Sovereign Fund and the Planning Commission with EqCoins and Envcoins, representing a diverse assemblage of experts and crusaders from across the society, and who happen to constitute the higher percentiles in the PSB Judge Coin worth-ranked list, may either attach them to their comments, suggestions, opinions and proposals (the ‘Submit-Cooperate’ option), nullify them to ‘enforce’ their judgements appropriate to their expertise, status and diligences (‘Challenge-Enforce-Difference’), return them (‘Abdicate-Turn in-Yield’), aggregate them with the like-minded equals and superiors (‘Group – Agglomerate - Aggregate’), or sell them in the FV-PV exchange for a Judge Stepdown (the ‘Stepdown-Quit’ option). In cases where the coins are attached to judgments, their value is symbolic of and indicative of the weight attached to the Judge’s opinion. Thus, and for example, an expert whose Judgecoins are priced high, and who has been favoured by many lesser experts with their Envcoins, might choose to ‘discharge’ all those Envcoins to force her opinions on the decision-making entity. Eqcoins and Envcoins may also be PV-monetized with diligences through a Commercial Service Provider/ ’Ombudsman Corporate KG’. Together these options provide adequate choice to Sustainability Judges so they may choose a strategy appropriate to their professional perspective and the gravity of each issue.

GDP Deviation Points
Economists are familiar with the concept of auctioning incremental economic activity to the highest bidder (‘PGDP Auctions’ would not be a misnomer). Now, the incoming government, at the start of its term, seeks to further its electoral agenda by auctioning ‘deviations from SGDP’-gross PGDP and NGDP points to potential domestic and foreign entities in exchange for Eqcoins and Envcoins. The domestic Industry roots for growth and seeks ’PGDP Efficiency points’ beyond the sustainable economic compromise. In its opposite, social organizations and NGOs seek 'NGDP Equity Points' – gross ‘negative’ deviations from the Sustainable GDP path, consistent with their view equity diversions in the present could prove beneficial to the long future of the nation. PGDP points represent production-oriented, high-discount rate, PV-emphasizing economic activities that ensure economic growth albeit at the cost of environmental sustainability. In contrast, NGDP points represent equity-oriented, low-discount rate, FV-emphasizing programs that further social (and environmental) sustainability albeit suppressing nominal GDP growth. Bear-fund managers, carbon-permit traders, social organizations (and environmentalists) participate in the NGDP point auctions. Bankers, who bid on behalf domestic clients, hedge industry potential macro-economic fluctuations and sectoral competition strategy in both auctions. Both, PGDP- and NGDP points deduct from the maximal value that the SGDP could attain.

The Size, the size !
The magnitude of the two Sustainability bonds matters crucially for it impacts upon the issue of Eqcoins and Envcoins, their prices at the auctions, and indeed, the future direction of the society. It'd therefore be straightforward to require all deviations beyond the uninsured, but sustainable core of the economy be covered with Sustainability bonds and priced in EqCoins and Envcoins. In other words, all incremental and potentially unsustainable economic activity must be insured with bonds. Thus, the task reduces to determine what fraction of the current economy is sustainable, and issuing bonds for the rest. This is not unlike carving out a smaller sustainable moon from a larger unsustainable one; the residual representing the sustainability insurance that the nation must buy in sustainability bonds. In turn, this boils down to the Sustainability criterion, which could be framed many ways.

Perhaps the easiest involves an arbitrarily-chosen Sustainability Index threshold value reducing the economy to which returns it to sustainability. Alternatively, one could seek to maximize the nation’s exchange rate against the Yen, known to be the currency that represents Sustainability. Toward this goal, issue Scaled-, Mirror Yen currency, ‘SM Yens’, to cover the size-uncertain SGDP portion of the economy and vary it concomitantly with the issue of the two sustainability bonds until the equalization of exchange rate between EqCoin and Yen on one hand, and Envcoins and the Yen on the other, which, in turn, imply the equality of marginal unsustainability both ways. The resulting magnitude of the two bonds issued, and the Yen-economy represent defensible estimates of the extent of inequity and inefficiency-related unsustainability in the economy (the quantum of the Social- and Environmental Sustainability Bonds to be issued) and the sustainable SGDP Core. The hypothetical Sustainability enhancements so obtained also imply a fall in gold prices (or, lesser gold holdings)/attenuated appreciation in prospective gold prices, and a strengthening of the domestic currency vis-a-vis the SM Yen.

With issual of bonds behind us, it is now imperative to examine the expectations that underlie, and the mechanics of designing PGDP and NGDP activities for bidding at the auctions.

Votes : ESH-, Social Equity- and Lifestyle Expectations
In a representative democracy, the political parties need a means to monitor and obtain information about the issues that concern the masses - their aspirations and apprehensions prospectively. While the primary purpose of ballots is to obtain the peoples’ vote for a representative democracy, one could so suggest to the masses, and thus so claim, that the votes are a medium for them to register their private and public expectations and plaints, sympathies and fears as well. Such votes then turn valuable to various entities. Political parties may lease the Votes polled with them both to NGOs and the Industry in return for Eqcoins/Envcoins as negotiated privately. The parties employ those coins either in Administration or to 'force the issue' in legislative proceedings.
NGOs that address the non-material, equity needs, fears, sympathies and aspirations of the public with government-funded social equity programs, seek and leverage votes from political parties for the ’Serve 2 PV Monetize’ opportunities embedded in them. The Industry, on the other hand, scans votes for information on material expectations that they could fulfill by expanding scale, or employing new technology, possibly with new resources.

In the above context, consider the ‘information content’ of votes. One could conceive of 'Private Lifestyle Expect keys’ and 'Public Social Equity Expect Keys'. The Private Lifestyle Expect keys in the votes represent material aspirations of citizens; aspirations that imply an impatience and a willingness to discount the future for lifestyle fulfillment in the present. It is convenient to partition the Lifestyle Equity Expect key into Durables-expect keys and Consumable-needs. Similarly, one could partition the Social Equity Expect keys into Public ESH-values and Social Equity-fears and sympathies. The former captures values for the Commons as well as risk-tolerance involving public-environment, -safety and –health; the latter peoples’ fears, sympathies, wishes and values for social justice, equal opportunity, family dignity, as well as expectations concerning public administration and governance, creation and maintenance of public infrastructure, and indeed, community resources and facilities. For Political parties and the Industry, these ‘Group’ Expect keys and Values embody the ‘raw material’ upon which to design their PGDP production strategies and NGDP social policies to create a ‘pareto-economic gameplan’ that enriches them and their constituencies without unduly reducing sustainability. It is to the mode of elicitation of these non-material and material preferences that I turn to next.

An expansionary society and a growth economy are best sourced from citizens who seek a life free of constraints. In order these values, expectations, fears, sympathies and needs are fully expressed, and so they may represent income-unconstrained WTPs and WTAs, it is necessary to design a framework within which Voters may register their will free of income worries (but wary of disturbing aggregate economic monetary balances and personal/family risk exacerbations). Put another way, an information-rich data set of (income-unconstrained) expectations, sympathies and fears is potentially available in electoral votes, should they be elicited with appropriately-designed instruments.

Toward such a design, first consider Social Expect keys. It is important to understand that the Equity expect keys - both ESH and Social Equity - imply a willingness to pay to achieve outcomes or negate risks common to the environment and the society. Given ESH is a Public FV Cause, it could be paired to Lifestyle Expect keys and tied to a ZS funding scheme. To ensure 'income/money-neutrality', one could claim to issue liquidity in an Intertemporal zero-sum involving the issue of FV ESH Bonds against fresh-liquidity-based 'Now money' offered to finance Durables at zero-percent loans. The index-driven ESH Bonds, which increase in NAV with the increased penetration of energy-efficient new durables (post the promulgation of tighter ESH standards) and fall with more consumption from intensive use of those durables, are issued ‘free’ to financiers of 0% Durable loans without issue of fresh liquidity. Financiers exploit the associated ESH bond volatility as the return for their zero-percent financing of durables. The bonds earn their 'face-value - principal' as a 100% NAV gain ~ equivalently the incremental liquidity for the bond issue ~ over a decade or two.

Next, consider a ‘Consumption-tax reduction–cum- Subsidy expansion’ policy as the perceived-income-enlarging strategy to induce voter expectations concerning consumables. The apparent income-expansion is funded by the rise in the NAV of the hypothetical ESH bonds consequent to an improvement in the index driving it. Citizens indicate their consumption preferences within this framework of a perceived income enlargement due the shifting out of the budget constraint.

Finally, conceive of Social equity and welfare programs, funded by a Transactions tax that is offered to the indigent public from the munificence of the better-off. This policy, too, returns a net monetary zero due the savings in Inflation - the Inflation Bakey harvested through inflation bonds – from the imposition of the transactions tax. The voter-chosen Social programs, directed at the indigent, turn the society more sustainable and offer cost-savings to Insurance firms from lower anticipated societal risks, who, in return, favor NGOs with a ‘Serve 2 Monetize’ key.

With these three ‘ZS-baits’ that expand perceived income while holding hypothetical (aggregate) monetary balances constant despite the issue of FV ESH bonds, and thus limit monetary impacts of expectations, the Voter may justifiably express his or her Lifestyle-, ESH-, and Societal expectations and values at the Ballot box (actually online, and prior to the voting) unmindful of personal income-constraints. These personal and group expectations are credible until they trigger ESH unsustainability from an expansion of hypothetical aggregate demand. Should voters ‘group-expect’ irrationally, the increase in economic activity, and the fall in sustainability index and bond NAV reduces the funding available to Consumables sector and triggers a potential price hike. Simultaneously, the resulting ESH unsustainability from an expectations-stoked, over-extended economy increases Group ESH risks to family and trips an individual/family-specific risk threshold. Together, the two factors force voters to scale back their expectations appropriate to their lifestyle and lifestyle-related risk-exposure. This negative feedback loop works to limit irrationality in aggregate voter expectations. 



Having offered voters an ‘expect-until-you-hurt’ economic-monetary framework to elicit a modified-Engel curve, it is expedient to offer a means to express them. Toward this goal, consider an extension of the online assignment of Futcoins as envisaged in 'Futcoin Democracy' (http://gprasadrao.blogspot.in/2013/10/futcoin-democracy.html). Voters, beyond registering their FV Futcoin assignments with various favored entities, also record their Lifestyle expectations and Social equity preferences through an 'Expect Radial' on a graphical software - a circle with 4 quadrants and radials in each quadrant; the four quadrants represent ESH and Social programs in one half, and Durable Goods and Consumables in the other. The quadrant-specific rays represent personal issue salience within those quadrants, and the distance from origin the appropriate ‘expect statistic’ along the length of the ray (over a self-assessed baseline). Citizens may use a pre-coded sheet with multi-level, nested issues to choose broad or specific issues of their personal and family interest in each quadrant, thus revealing their issue salience. They rate themselves at what they perceive to be their initial percentile standing/consumption rank in the society, then and on each chosen issue-ray, register their Lifestyle Expect keys (or, in the case of Social Expectations, current and optimal resource allocation to ESH and Social issues). The resulting 'expect fractals' are processed digitally along with voter socio-economic data to obtain aggregate expectations, preferences, fears, sympathies and choices as regards various categories of goods, services, environmental priorities, as well as societal issues, which upon further processing yield information that facilitate the design of PGDP and NGDP activities.

Designing the PGDP/NGDP Activities
Simultaneous with the elicitation of citizen aspirations at the ballot box, the Industry too seeks economic opportunities to leverage its existing and prospective technological innovations, both to fulfill the lifestyle aspirations of the various socio-economic groups, and to develop appropriate public infrastructure. Given a socio-economically-partitioned set of voter expectations and given increments to resource endowments, the Technology Consulting/IPO sector in the PV capital market anticipates technological innovations and a larger production possibility frontier for the society that help reveal market growth opportunities. The vetting of the Lifestyle (and Equity) Expect keys in the capital market obtains an information set that reveals what they imply for the demands for final consumer products and services (and by induction, the demand for intermediate products and primary raw materials as well as incremental capital investments).

Since the various political parties stake different niches in the socio-political spectrum, the votes polled with them are attractive to industrial sectors and businesses serving different socio-economic strata. This strategy stresses the partitioning of the Voter space in to socio-economic niches occupied by political parties of various hues, and opens opportunities for businesses to target those niches in developing their economic strategies at the start of a new term. Political parties too have an incentive to sharply differentiate themselves by socio-economic niche that addresses a certain equity-efficiency space in the economy. Industry sectors seek such information for different voter groups toward formulating their production strategies and hence approach particular political parties that represent those voter interests and who are the repository of their Expect keys. The information on income-unconstrained potential demand facilitates Industry associations to design PGDP activities toward a pareto macro-policy strategy that enlarges industry profits, improves the lifestyles of the masses, and helps determine the budgetary resource allocations of the new government. In the case of ESH and Social Equity quadrants, Voters register their salience by choosing the issue radials from the coded sheet, and indicate their perception of resource allocations – where they are today, and where they should be. This logic permits NGOs to recover societal preferences, and stake remedial NGDP policies and programs that are financed by the Government and supported by Insurance firms in the capital markets.

To elucidate the concept, consider a business strategist who, on behalf an industry sector, offers ‘EqCoins/Envcoins’ to lease the block of votes polled with a Communist party. Carrying the votes to the IPO/Technology Consulting/Growth sections of the capital market, he asks how the income-unconstrained aspirations embodied in the Expect-Radials could be fulfilled by new technology. The Technology Consultant leverages the aggregate information on income-unconstrained Lifestyle demands gleaned from the Expect Radials through the resource-industry, technology- and capital markets and evaluates them on techno-economic grounds to indicate a set of feasible household demands given certain resource endowments, technology increments, policy changes and wage/income-growth opportunities. With this information, the Consultant designs and proposes appropriate NGDP and/or PGDP activities that could be bought in to the budget at the PGDP-NGDP auctions to obtain new business opportunities for his clients in a 3-way pareto strategy that increases household incomes, stimulates consumption demand and induces incremental industrial activity, while furthering the party’s image among households and businesses.

Why the Auctions?
These NGDP and PGDP deviation points that the Government auctions to the Industry, Banks, and NGOs in return for Eq- and Envcoins, serve several purposes. They reveal to the short-sighted Government and the ‘long-vision’ Sovereign Fund the marginal economic, environmental and social cost of exceeding or under-performing the sustainable GDP trend. These coins, because they link FV and PV markets and are exchanged in PGDP and NGDP auctions provide invaluable information regarding the shadow value of those competing alternatives. By providing an avenue for stakeholders to indicate their interests and inclinations, these auctions permit the Government the flexibility to re-arrange economic activity cross-sectionally across economic sectors, and temporally over political regimes, and thus obtain a second-best compromise around the path to long-run sustainability.

PGDP/NGDP Auctions
Due the interdependence of gross PGDP and NGDP deviation point bids, the auctions are conducted in simultaneous, but divided chambers with free flow of (non-confidential) information between. The auction involves the sale of PGDP and NGDP Deviation points to the various stakeholders in return for Eq- and Envcoins bundled with project proposals. The marginal auction price of Deviation (from SGDP) points across the two chambers reflects the magnitude of sustainability losses that partisan stakeholders are willing to impose upon the broader society to advance their short-run capitalist/societal/political stakes. Thus, PGDP bids reflect the rents perceived by industries, investors and bankers to be associated with alternative incremental sectoral economic activity, or returns to hedges, options and strategies. Beyond the hedges, options and strategies, the NGDP bids reflect the political mileage to be gained with equity-oriented programs. Due the simultaneity of the auctions, coin prices adjust in both markets and reveal the marginal sustainability price to be paid for buying incremental (or, decrement to) economic activity.

Auctions and Coin Prices
Though index-linked, Eq- and Envcoin prices could rise to reflect speculatory, or extra-market demand, as for example, demand from PGDP and NGDP auctions or to facilitate the leasing of votes. In such cases, the intrinsic Coin value may differ from the trading price reflecting a dis-equilibrium in the state and valuation of Sustainability. Consider Envcoins bid up for the PGDP auctions. The rise in price has more to do with the expected rents from unsustainable activities listed in the PGDP auctions than with any sustainability enhancements. Similarly, a rise in EqCoin prices due demand from NGDP auction participants who seek to cover social unsustainability reflects a demand for remedial equity solutions. In both cases, the auctions involve unsustainable or less-sustainable activities. Thus, the valuation wedge is indicative of immediate opportunity to scale up activities that add to sustainability.

Coin Prices and GDP Points
Post the determination of the size, the issue of Sustainability Bonds, and the creation and trading of Eqcoins and Envcoins, the issue arises as to how many GDP Deviation points - whether PGDP or NGDP - be issued. Intuitively though, the Planning Commission and the Sovereign Fund could adopt a Supply curve for aggregate Auction points related directly to the price of the two coins. Should the Sustainability Bond index appreciate, Eqcoins and Envcoin prices increase expecting an increase in terminal Bond NAV. This is suggestive of the Society being better prepared to handle some prospective unsustainability, which is then accommodated with more GDP Auction points at the PGDP and NGDP auctions. This suggests a supply curve for Auction points that slopes upward in Coin prices.

The coin prices are also crucial in another, real-world sense. Given that Bonds were issued until the marginal sustainability condition was fulfilled, the Coin priced lower at any future point in time would indicate the direction of sustainability shortfall, and indeed, the opportunistic direction of the economy. Should the Sustainability agenda drive public sentiment, that would imply different political niches are advantaged and expedient at different time points.

Post use in decision-making, coins are discharged and the same informed the coin market which absorbs the information to adjust the NAV of the outstanding coin inventory. Should the coins be discharged to enforce judgements, they turn scarcer and increase in price over their ‘fair index-driven value’ and induce, depending upon the Judge-Expert’s opinion, either a fall to the fair price implying static sustainability index value, or a compensating increase in the respective sustainability index implying a fast-forwarding of sustainability.

Net ‘em out !
Post the auctions, the Government, now empowered with Eq- and Envcoins to decide upon the PGDP and NGDP projects proposals from the auctions, consults with the SFA, and the Planning Commission to decide upon them. The task before them involves ranking the proposals, then vetting, netting and collating them in a way that obtains the largest GDP increment for the smallest environmental and social impact. To facilitate the netting, the Government computes for each proposed PGDP activity, it’s GDP Multiplier and its impact on the relevant Sustainability index, and ranks them by a simple ‘net benefits criterion’. Projects with large GDP Multipliers, ie, a large GDP contribution relative to the Sustainability decrements they cause, are ranked ahead of those with smaller multipliers. It then retains those PGDP activities that obtain the largest GDP boost net of the impact on Sustainability, and delete those at the bottom of that ranked list. The logic reverses in the case of NGDP activities; activities that obtain the largest equity increments for the smallest GDP loss being preferred over lesser alternatives. In the final step, the Government combines the two ranked lists in order of decreasing net benefits, effectively interspersing PGDP activities with NGDP proposals. (A superior net benefit criterion would exploit the marginal impact of sustainability index changes on the price of Envcoins). The netting out of NGDP points from PGDP points effectively translates to shelving projects with low multipliers and relatively large environmental impacts.

Sharing the pie: Learning by Example
The apportionment of the realized PGDP and NGDP returns follows a logical criterion based upon politico-economic and market rationale, to which we turn next. Consider a $10B 'Full potential' economy, the SGDP portion of which comprises $9.5B and the slated PGDP and NGDP activities, respectively, $300M and $200M in fresh liquidity-financed social- and environmental-sustainability bonds. The SGDP is largely staked by investors and assumed fully realized in the capital markets. However, the incrementally-auctioned PGDP and NGDP activities are only partly achieved, for various reasons including Eqcoin- and Envcoin prices, leaving behind $100M each of unrealized PGDP and NGDP 'bakeys', thus obtaining a $9.8B economy. More generally though, it is necessary to conceive of a scheme that apportions the various shares of the PGDP and NGDP across the economic, financial, equity and environmental stakeholder-participants.

Consider the five test-criteria of a market economy: Innovation, Sustainability, Efficiency, Inflation, and Corruption. By associating them with different, albeit variably-spaced stages of the economy, one could determine when to partition the various shares within the PGDP and NGDP pies, which in turn facilitates deal-making and hedging strategies among stakeholders. The pace of innovation in sustainability and efficiency is, perhaps, best measured by the IPO market. Should the innovations be prospectively productive, the IPO market takes off first from the economic trough ahead of the equities. The point in time at which the IPO market levels off separates the 'PGDP I' from the 'PGDP O'. Next, and in the follow of the IPO market, consider Gold prices at the trigger point of an equity boom. Normally, Gold would fall with bonds as equities rise to signal the boom. However, should the boom be supported by inadequately-trained workforce, inefficient policies, or obsolete technology, the fall in Gold reverses early in the boom to anticipate incipient unsustainability, signals the end of the 'PGDP O', and the start of the 'PGDP A'. A similar logic holds in the separation of the 'PGDP A' from 'PGDP B'. Copper, an essential for industrial expansion, rises in the Commodity markets with the onset of the boom. It's rise, however, is attenuated and extended should the economy be operating at maximal energy-efficiency. This extended attenuation in Copper prices implies a large 'PGDP A' share. However, should the economy be inefficient, Copper prices rise sharply with economic boom, signalling the end of the 'PGDP A' and the onset of the 'PGDP B'. A similar logic that leverages Inflation, helps partition the 'PGDP E' from 'PGDP B', signalling the conclusion of the macro boom.

Having determined the criteria to allocate gains from 'incremental to SGDP' PGDP and NGDP economic activities, we move to the political stakes and hedges necessary to set the ball rolling.

The Political Hedges
Politicians, ever careful of the fickle public, hedge their fortunes between the booms and the busts of the economic cycle. By dividing their bets between the Efficiency-oriented PGDP and Equity-oriented NGDP economies, and staking appropriate positions for contingent electoral outcomes, the parties ensure they are always 'in the action' regardless of the political mood of the masses, or for that matter, the planned or unanticipated gyrations of the macro-economy. It would be interesting to examine what those positions and stakes are likely to be in the context of the GDP Deviation point auctions and the pricing of deviations from the SGDP.

Provide first for three political alignments: Left, Center and Right. Complementing the above, provide for three entities, the Industry, the Households, and the Environmentalists who negotiate, vote, deal or hedge with/against political parties their share of the returns should the economy boom as planned ('Key Boons'), or surprise and fail ('Hedge Moons'). While the specifics are many, the general strategy is even predictable. The Industry and business households orient with the political parties of the Right and stake an efficiency-motivated, PV-seeking, PGDP economy. Environmentalists partner Social activists in furthering an equity-oriented NGDP economy and an Environmentally-green NGDP FV economy. Households, with stakes in economic survival, lifestyle aspirations, family health, social peace and environmental sustainability choose a centrist path that would follow the tenets of the SGDP economy - an economy that seeks to maximize a judicious mix of PV and FV activities.

The attached table presents, as a 2-way 3x3 matrix, one of the innumerable apportionments that are possible. The matrix indicates how the economic, social and environmental stakeholders hedge themselves for various combinations of electoral and economic outcomes. These hedges ensure they are compensated for electoral flip-flops and economic surprises albeit at the cost of accepting an occasional lesson, waiving a share, or even suffering a loss. More importantly, the hedges permit a more stable socio-economic polity that makes judicious compromises to secure an expectations-based PV society while furthering an FV agenda. 

 

The Budget
Now, the Planning Commission, the storehouse of all sustainable, FV-endowing economic and social/environmental programs, funds their implementation with the goal to expand societal FV. This funding takes the form of cause/program-specific 'lines' that are differentiated by their social contribution and term. Long equity-oriented causes such as democracy, women’s health, education, social and military peace, that are fundamental to the existence of the nation and the expansion of the society, must be addressed by funding specific multi-decadal programs that secure the outcome. For example, the Sovereign fund may, as part of its Vision 2100 plan, fund a 100 year program to educate citizens about population control and provide for the same with a family planning budget line that forms the bottom layer of the budget. The Planning Commission may fund a 50-year MDG gender equality program in higher education. This line would run across governments and constitute the second layer of the SGDP budget. Similar lines addressing other societal causes and those that address FV-enhancing, perpetual societal needs sustainably, add up to a substantial portion of the budget. The budget, however, is a statement of all planned activities beyond these long-term and sustainable programs. It is in the context of populating the incremental, discretionary, medium and short-term activities in the budget that the PGDP and NGDP auctions are best motivated.

Thus, while the Government, contingent upon its politico-economic outlook, may be eager to fast-forward environmentally unsustainable PGDP programs that nonetheless create jobs and 'PV-enriching growth' in the redux of the FV society, Environmental groups partner Banks and Hedge funds might seek an attenuated economic strategy that emphasises an equity-oriented NGDP economy that takes a breather to rejuvenate itself back to environmental sustainability. What survives in the budget constitutes the net of these opposing perspectives and comprises the non-permanent portion of the annual budget. The magnitude and the constitution of this portion of the budget is as much related to the state of the environment and social sensitivities as it is to the GDP Multiplier and the environmental/equity contribution or impact of the projects. These factors are summarized in the price of Eqcoins and Envcoins in the two auctions. In periods characterized by high and/or rising coin prices that signify adequate progress toward sustainability, the stakeholders may seek to expand the economy at the margin by funding short-term strategic efficiency and equity programs. Falling coin prices, however, are symptomatic of sustainability deficits, and imply the Government mainstream its activities by excluding the more coin-intensive PGDP and NGDP activities. The implication is that budgets framed in such periods have a larger PGDP+NGDP component than budgets in periods of ‘low’ coin prices.

A Recap
The proposal above offers a credible alternative to a failed, inefficient, corrupt democracy of the people, by the masses, for the few. By providing for a choice at the ballot box, it offers citizens the right to exercise their vote either with the political system, or with the Judge-Expert group. This ‘credible market-based alternative’ reduces the potential role of politicians in governance, and thus reduces the politicization of issues. It formalises regulatory, even legislative decision-making and reduces the role of corrupt politicians by creating an electorally-consistent parallel decision-making structure that distributes the power to judge regulatory and legislative issues among crusaders and activists, experts, professional, academics and the intelligentia who compete for, and are assigned that right, embodied in Eqcoins and Envcoins vested with them, by virtue of their achievements, status and diligences. In turn, this forces parties to adopt more ethical and transparent party-politics even as it fosters a community of Judge-Experts and sustains healthy competition amongst them to the benefit of democracy and an FV-society.

A distinguishing feature of this proposal is how it negates the unfair advantage that accrues to powerful interests in conventional decision-making due their wealth and position. Unlike other proposals that permit and gloss over an unequal playing field, this proposal enforces a near level-playing field by distributing the Eqcoins and Envcoins, imbued with the power to judge the nation’s future, within a worthy and virtuous Judge-Expert group. Since Eq- and Envcoins are distributed by the PSE Administrator with a non-partisan, just and defensible market-worth criterion, the coin-based PGPD/NGDP auctions are less susceptible to the wealth-effect that would otherwise swamp them and reduce the auctions to an oligopolistic duel between the Rich and the richer. A level-playing field ensures that the power of ill-gotten 'wealth' from the exploitation of the commons, the natural resources and generations of labor, is not leveraged further to exacerbate the existing societal inequity. This is a crucial ‘plus’ in societies overtaken by the corrupt and nefarious nexus between politicians and industry, and bodes well for the future of the society.

The issue of bonds upon, and the hedging permitted in the auctions insure the unsustainable activities and facilitate an inclusive society that accommodates stakeholders of all hues. Tangentially, the Government/permitted stakeholders may post-process the PGDP (and NGDP) bids, the prevailing marginal coin prices (and their movements), to learn of capacity constraints, utilisation, and investment plans, as well as technology- and innovation rents, and the shadow value of economic and political options and hedges. The PGDP and NGDP activities, when implemented by the government in the opposite of the SGDP, fast-forward some projects and hold back others, thus permitting invaluable short-term economic (and political) maneuverability while maintaining the focus upon long-run Sustainability.

As explained above, the system is sufficiently robust to be leveraged in decisions concerning the constitution and size of budgets. By accommodating short-run deviations from Sustainability, it lends itself to adoption by political regimes to further their niche, albeit term-limited strategies. The proposal is both broad and sufficiently grand to accommodate the stakes of various political parties, lobby and interest groups representing the multifarious contexts, and yet obtain a quasi-efficient and equitable path to a long-run sustainable and Pareto-superior society.