Category: Economics 2707

Introduction

Fiscal management is just as crucial to the regions prosperity as the resources and people living there. According to Simon et al. (2018), one can judge the quality of a local public administration by the nearest infrastructure. This paper explores the fundamentals of regional economies, namely how states and county governments get money and the possibility of satisfying demands for government services with current only monetary sources.

About The Source of Revenue

The primary monetary source for state and municipal governments is taxes. Since 1996, taxes have contributed over 45% of the state and county governments income (Park, 2017). Additional sources include intergovernmental reimbursements from federal, national, state, and local authorities. There are also selective payroll taxes, direct utilities, license fees, forfeitures and payments to establishments like colleges and universities and insurance investors.

About Balance

Balancing revenues and expenditures is one of the primary fiscal objectives of states and local governments. It is feasible to reconcile the needs for government services with the available revenue sources. According to Park (2017), manipulating interstate transactions, fees, and fines makes it possible for local leaders to maintain the financial balance of their regions. Despite monetary backup, revenue growth is still vital because demand for government services grows with the economy.

Conclusion

This short essay is a small study of the basic mechanisms of local economies. In America, the sources of income are various taxes, fees and fines, and intergovernmental transactions. This system balances local budgets and meets infrastructural and institutional needs of communities.

References

Park, S. (2017). Local revenue structure under economic hardship: Reliance on alternative revenue sources in California counties. Local Government Studies, 43(4), 645667. Web.

Simon, A., Steel, B. S., & Lovrich, N. P. (2018). State and local government and politics (2^nd ed.). OSU Press.

Introduction

Despite having the largest economy in the world, the United States has the highest rates of poverty compared to other wealthy nations. The government uses a specific measure of poverty based on a minimum yearly income to categorize people as poor or not to decide who is eligible for social assistance programs. A household is suitable for a government welfare program when its income falls below the necessary level. Poverty is linked to several social services inequalities, including education, healthcare access, and general prejudice. In addition, families in poverty are more likely to experience other disparities, such as high rates of sickness and crime (Dettlaff & Boyd, 2020). The government has put in place measures to ensure equality among the people by minimizing perceived inequities connected with poverty since particular population sectors are linked with high poverty levels. However, despite the governments commitment to implement these equity measures, the nations economic situation might determine whether or not these welfare programs are successful.

Simple demand and supply, as employed in the utility theory, may be utilized to describe welfare economics. Each individual tries to maximize the perceived worth of each thing or service they consume to maximize utility, which is the value associated with using a good or service. Economic welfare aims to achieve the best possible happiness for all customers by maximizing consumer and producer surplus. The goal is to guarantee that all customers in a straightforward market system are as satisfied as possible by assuring their well-being at the best possible level. Employment and inflation are two metrics that may be used to assess a nations economic health. Low employment rates cause high economic inequalities and increased levels of poverty among the population. The government must take the necessary steps to guarantee equality in income distribution since high unemployment rates lead to inequalities in income distribution and welfare (Fleurbaey, 2018). High employment rates, which result in decreased income gaps across all demographic groups, signify that the economy is doing well.

The labor market circumstances improve when the economy is doing exemplarily well, leading to better employment throughout the different demographic groups. As a result, many people who would have needed the social security program now have a stable source of income. Low-income families are no longer as dependent on handouts, with significantly evolving economic regulations like the minimum wage and the earned income tax credit. Due to this, welfare policies must be modified to serve better families that are jobless. Most governments, particularly in the US, have started initiatives to generate jobs and cut back on monetary support to the poor. Compared to providing financial aid to the populace without corresponding economic gains, this is thought to be more long-term sustainable (Fleurbaey, 2018). In order to absorb new market entrants and provide people looking for work with strong labor markets, employment-oriented welfare programs are more successful and long-lasting.

Government initiatives that boost the economy are better suited since they have caused behavioral and mental shifts. Most people prefer to work than receive government support through the welfare system. As a result, fewer individuals require government help, increasing labor force participation rates for both educated and illiterate groups. By ensuring that aid programs are in place to address any economic slowdowns, the government can be ready to handle both economic booms and recessions (Baujard, 2021). Accordingly, the study shows that fewer people rely on government assistance programs during solid economic success than during weak economic performance. The government might spend more on initiatives that create new jobs to enhance employment rates and lessen the need for social programs.

However, there are many other ways that economic performance, such as in a recession, might impact a welfare system. When the economy is doing well, the populace benefits from more employment, a diverse income base, and a decreased reliance on government social services. However, a recession or an economic downturn affects the governments social programs (Giuppon et al., 2022). In particular, during recessions, when specific segments of the population may be in danger of job losses and decreased earnings (Giuppon et al., 2022), the government should have a plan that anticipates economic trends to make educated predictions that increase the degree of readiness.

It is still being determined which economic growth or policy improvements will have the most influence on reducing the number of people on assistance. Even if welfare use has decreased over time, it is crucial to understand how economic expansion and changes in economic policy have contributed to this trend. There may be varying degrees of change in well-being due to the economy, policies, and both. However, policy influences how economic decisions are made; thus, it is challenging to analyze one without considering the other. While governments are trying too hard to change peoples perspectives from a welfare viewpoint to a work program, comparable efforts are not recognized in helping governments raise the degree of knowledge about these occupations so that those reliant on assistance may find them (Neild, 2018). As a result, it is not easy to distinguish between economic and policy functions in this situation.

A slight change in economic conditions can have significant effects since there is no difference between economic and policy change effects on the welfare system. Although this is anticipated to occur over a specific period, it has been stated that if unemployment rose by only one percent, there would be a commensurate increase in welfare demand of up to five percent. However, implementing policy measures to boost labor force participation would sharply reduce welfare needs (Neild, 2018). As a result, unemployment and the welfare system frequently follow cyclical patterns. For example, while the economy thrives, there is substantial employment and minimal demand for welfare. However, when unemployment occurs, families lose their jobs and must seek government assistance for maintenance.

On the other side, it has been noted that during prosperous economic times, individuals tend to withdraw from government help programs because they are secure in their finances and can afford the six necessities of life. When the economy is struggling, unemployment rates rise, and the number of people seeking social welfare help rises because they lack job stability. The most significant rise is reportedly seen in couples who turn to welfare support programs after losing their jobs (Neild, 2018). The demand for social services is thought to rise by up to 17% for every percentage point that the number of jobless individuals or couples rises. Because of this, if there is significant unemployment during a recession, it may have a significant impact on welfare demand. The government must have the proper procedures to make forecasts and be well-prepared to prevent disaster. However, the government may establish regulations limiting the number of eligible people for welfare, such as sanctions, time limits, or any other measures that may prevent the deserving population from receiving such aid (Neild, 2018). Further study should be done to comprehend the effects of such policies on social welfare.

However, poverty is a significant concern for all assistance systems. Although welfare regimes may seek more significant and ambitious aims, eradicating poverty is their primary objective. This was initially considered an absolute level beyond which an individual presence becomes impossible. Poverty suggests a lack of necessities such as adequate fuel, food, and clothes to maintain bodily effectiveness. This perspective holds that poverty is uncommon in industrialized; the United States, Canada, the United Kingdom, and Australia are examples of developed countries, and even the poor there have better lives than most people worldwide (Traylor et al., 2020). However, describing someone as poor solely because they are hungry misses the reality that being poor can also entail not having access to the same standards, circumstances, and pleasures as the bulk of society. Peter Townsend refers to relative poverty, which he defines as lacking the living conditions and amenities that would be considered normal, or at the very least generally supported and acceptable, in the community to which they belong. The poor are, in this sense, not the needy but the less well-off.

On the other hand, current welfare arguments frequently center on social exclusion as opposed to the traditional topic of poverty. According to this theory, poverty has two fundamental consequences. Financial issues related to disadvantage include material deprivation, whether it be absolute or relative. Second, being poor suggests that disadvantage is a structural problem (Heidenreich, 2022), making those who are poor victims of some form of social injustice. On the contrary, social exclusion refers to a broader notion that includes all actions and circumstances that exclude people and groups from society. Thus, socially excluded people suffer from various ills, including financial poverty, academic failure, criminal activity, antisocial conduct, a dysfunctional home environment, and a lack of work ethic.

In other words, cultural aspects may explain social disadvantage in the same way that material factors do. The rhetoric of social exclusion has had a tremendous impact on welfare policy. For instance, whereas concern about poverty often ties welfare support to achieving social equality via the redistribution of wealth, social exclusion is typically related to the pursuit of opportunity equality and the distribution of life opportunities rather than wealth (Heidenreich, 2022). Due to this, social inclusion is utilized rather than equality. Deprivation must also be considered a cultural, social, and even moral issue rather than merely an economic one, which requires a radical rethinking of existing welfare systems.

The idea that the government should meet societal responsibility for promoting social well-being is known as welfare. After that, most Western liberal democracies developed a welfare consensus, having parties on the left, right, and center competing to establish their welfare qualities while mainly arguing over minor issues like funding, structure, and organization. Electoral factors likely facilitated this accord since many voters understood that the welfare state offered social assurances that free market capitalism could never match. On the other hand, welfare is not a coherent philosophy (Heidenreich, 2022). Although socialists, liberals, and conservatives have all acknowledged its advantages, they have frequently been drawn to welfare for different reasons and have accepted alternate welfare systems.

Furthermore, national efficiency rather than justice and fairness served as one of the earliest motivations for social welfare. When a countrys workforce is malnourished and unwell, it cannot build a prosperous economy, let alone an effective army. Therefore, it is not a coincidence that the foundations of the welfare state were laid in countries like Germany and the United Kingdom during global competition and colonial expansion before the beginning of World War One (Zolberg, 2019). The first modern welfare state, which included healthcare and accident insurance, sick pay, and old age pensions, was formed in Germany in the 1880s under the leadership of Chancellor Bismarck.

Such a system has the advantage of actively addressing the problem of relative poverty while attempting to remove the stigma associated with welfare by ensuring that benefits are as inclusive as possible and are not means-tested. The welfare state aims to humanize capitalism through lowering distributional inequality, not to achieve social equality, as this is impossible entirely. As a result, social democratic welfare is dedicated to promoting greater outcomes, equality, and equal opportunities (Zolberg, 2019). Therefore, governments worldwide confronted the dilemma of how to finance social programs as tax receipts decreased. This boiled down to two options: increase taxes or cut the welfare budget. New Right ideologies emerged in this setting, arguing that welfare was also an insult to individuality and personal responsibility in addition to being the cause of excessively high taxes (Zolberg, 2019). Despite this, many who oppose welfare have had views that are as diverse as welfare itself. The need to reform the welfare state and reconsider welfare provision has frequently been emphasized by new socialist democrats and third-way thinkers.

Finally, social democratic thinkers have also connected welfare to the concept of equality since they see it as a necessary counterbalance to the injustices and inhumanity of market capitalism. Indeed, the core of contemporary socialism is the welfare state. For instance, Anthony Crosland described socialism in the future of socialism as a movement toward equality rather than the fundamentalist goal of shared ownership (Zolberg, 2019). This revisionist socialist perspective holds that the welfare state is a redistributive mechanism that transfers revenue from the rich to the poor through a network of public services and welfare payments supported by progressive taxation.

Labor Force Participations

As said, better economic conditions increase everyones work options, which cuts down on welfare utilization. However, the relationship between economic success and welfare usage is not equal. When economic performance rises by 1%, fewer people join the labor market, decreasing their reliance on welfare, and more people turn to government support. It will be greater if the economy continues to worsen at the same rate. Unskilled people experience a rise in unemployment of more than 1% if the economy worsens (Hiswls et al., 2017), increasing the unemployment rate by 1%. However, this depends on whether the unemployed will keep looking for work to stay in the labor force or if they will stay jobless and apply for government aid.

Relationship Between Poverty and Income

A single-parent household is more affected by an increase in unemployment, mainly when the mother is the lone parent. As the number of low-wage occupations rises, more women will enter the workforce as economic performance improves. As a result, when a recession hits, total unemployment rises, and a disproportionately large percentage of the poor turn to public assistance. However, a modest drop in employment would considerably increase poverty levels if there were a considerable degree of economic inequality. Expanding employment prospects brought about by improving economic performance have reduced reliance on government assistance.

As one may have predicted, poverty declined throughout the 1990s due to the economic boom. Poverty rates among female-headed families with children are at an all-time low. However, as previous studies have demonstrated, fewer people have managed to escape poverty than have quit getting financial assistance. As a result, more working poor or poor actively seek employment (Hiswls et al., 2017). The number of working poor people tends to increase since more low-paying employment is accessible during economic expansions. Consequently, a recession is likely to result in a rise in overall poverty and a decline in the percentage of poor persons who are employed.

Poverty and the general state of the economy have always been closely related. The 1960s and 1970s estimates claimed that poverty would decrease by 1% for every 1% that unemployment rates fell. Although there was a strong job market and lower unemployment in the 1980s (Powell, 2018), poverty did not decline as much during this period as historical statistics had predicted. This effect is related to the pay difference of that decade, as income reductions among lower-skilled workers offset the effects of the active labor market. A more significant correlation between variations in rates of unemployment and poverty reemerged, despite the 1990s reductions in poverty being relatively minor compared to the 1960s rapid fall.

Furthermore, only a few low-wage employees now claim unemployment insurance when they quit or lose their jobs. This terrible outcome is the consequence of several events. First, people dismissed for a legitimate reasonlike a woman whose childcare plans have gone throughfrequently are not eligible for unemployment benefits (Powell, 2018). Second, those who voluntarily quit their jobs are frequently ineligible for unemployment benefits, such as mothers who cannot organize transportation between work and childcare responsibilities. Third, several states do not provide unemployment benefits to people looking for part-time work. Last but not least, many low-wage employees fail to fulfill state rules for the amount of time and continuous labor a person must perform to be eligible for unemployment insurance. Shorter waiting periods for benefits or payments to part-time job searchers are two examples of changes that might enable low-wage employees who do not want to or are unable to return to the poverty rolls to find an alternate source of short-term support.

It is clear from the overall picture that the strong economy has improved work opportunities and decreased caseloads. Furthermore, it has contributed to reducing poverty and raising income in low-income households, primarily through wage increases. The economy probably contributed significantly to the decline in benefit rolls and rise in labor force participation throughout the 1990s (Powell, 2018), even if it was undoubtedly not the main driver. Welfare reform would have been far more gradual and moderate if it had been implemented during a period of slower economic development.

TANF Preparation for Handling Recession

Due to TANF, which changed the financing for public assistance from a matching grant system to a set block grant, the states are now responsible for bearing the remaining financial risk of any changes in the economic need. With fixed finance, there is a severe problem since the demand for public welfare is countercyclical or grows during economic hardship (Powell, 2018). So, during a recession, states frequently need to allocate more substantial funds to public assistance programs. Of course, this poses severe problems for several states, most of which are controlled by balanced budget requirements and usually cut expenditures during recessions.

Three elements in ANF are intended to assist states in preparing for or surviving recessions that impede their capacity to continue providing welfare assistance to all low-income families. First, TANF money may be carried over by states. The TANF block grant gives states a set sum of federal money, the amount of which is based on what was spent on the previous AFDC program. States must comply with a maintenance of effort requirement, forcing them to keep providing state funding at 80% of the level provided to a core group of public assistance programs in the mid-1990s to receive these funds without paying the penalty (Haskins & Weidinger, 2019). TANF expressly permitted states to roll over unutilized block grant funds into subsequent years. One of the main justifications for this provision was allowing states to accumulate rainy day funds they could draw from if faced with increasing economic need.

Several states have taken advantage of this carryover clause. States reported $9 billion in TANF monies that had yet to be spent as of September 2000, or 14.5 percent of the total TANF funding granted since 1996 (Haskins & Weidinger, 2019). While some funds still need to be funded, others have been committed to state programs but have yet to be spent. It is challenging to estimate precisely how much of these monies would be available to cover additional expenditure requirements during an economic downturn. Unfortunately for states, there is significant uncertainty over the future of carryover funding. Congress might pass legislation by reallocating unused state TANF funding to other budgetary needs (Haskins & Weidinger, 2019). Because of the potential loss of this money, several states have specifically avoided carryovers. Due to this danger, states are unlikely to rely on the carryover provisions entirely.

Additionally, cash welfare must be paid for using the carryover money. This limits the utility of TANF carryover finances as a vehicle for funding the recession by indicating that they cannot be used to cover increases in the expenses of state labor programs during a downturn, like increasing child care or providing wage subsidies. The $1.7 billion Federal Loan Fund, which allows states to loan up to 10% of their TANF block grant (Haskins & Weidinger, 2019), is the second mechanism for managing recessions. States must pay interest at the market rate and repay loans within three years. The states still need to utilize this option. It is probably only marginally beneficial given that borrowing by the state for social welfare programs during recessions may not have broad public support.

More intriguingly, the US economy altered how public assistance is funded to a set block grant, exposing the nation to residual financial risk when a recession hit. Since the country must function on a balanced budget to comply with the law, it must cut back on expenditures during specific periods, leading to a significant issue (Haskins & Weidinger, 2019). To ensure a fund at the state and federal levels to continue providing aid to worthy groups, the government establishes rules that enable the state to continue providing social support to vulnerable people when a recession occurs.

The state governments have established an emergency fund to draw from if a response plan is necessary. However, the states continue to run a significant risk concerning emergency carryover funds that may be unused and lost. As a result, governments find it challenging to hold onto carryover money they might need for social assistance in the future (Haskins & Weidinger, 2019). Additionally, there is a limited need for temporary assistance funds since carryover funds set aside for emergencies must be used for cash welfare and cannot defray costs associated with state employment programs.

Policies Strategies

Given the significance of social welfare programs, state and federal governments must develop strategies to protect vulnerable populations from economic downturns. This would make it possible for governments to adopt work-oriented initiatives to create employment during subpar labor market performance, assisting in resolving the countercyclical financial issues states confront during the recession (Haskins & Weidinger, 2019). Therefore, states must redirect accessibility to their contingency funds by promoting accessibility if there is a significant change in the percentage of unemployment. This is crucial to make it simpler for governments to access money during recessions.

Improving Temporary Assistance for Needy Families

In order to ensure that states with more significant economic needs may get more federal monies, it would be vital to strengthen TANF by adding cyclicality to block financing. Guaranteeing that the payments are linked to changing unemployment as one of the indications of need would be made practicable (Haskins & Weidinger, 2019). Contingency fund programs must be permitted to supplement such programs to guarantee that the states unique economic demands are satisfied (Hiswls et al., 2017). Suppose Congress decides to reallocate the extra monies. In that case, the states may be able to establish a rainy-day fund, enabling them to retain a small portion of their block grant funding without suffering repercussions. The states can carry over money but will not accumulate significant balances.

Matching State Flexibility With Federal Time Limits

It can be challenging for those who need social support to obtain work, make enough money, and leave the welfare system during a recession. As a result, the federally mandated time frame has to be extended since it would be unreasonable to deny people access to public assistance because of time restrictions (Hiswls et al., 2017). Therefore, when a recession occurs, governments should have the option to continue providing aid to people unable to support their families financially during such times.

Empowerment as an Option

Because state governments must rely on the private sector, welfare-to-work programs are not long-term viable. For the unemployed portion of the population to continue receiving income while they hunt for alternative jobs in the private sector, the state that wants to continue providing aid must establish an employment pool for them. The state should keep looking for better ways to implement successful employment initiatives.

Conclusion

As seen above, social programs benefit significantly from a healthy economy. The condition of unemployment can be negatively impacted by a mild recession, although state governments have adopted several changes to lessen reliance on social programs. Due to these economic uncertainties, welfare programs must be maintained since the unemployed will keep asking the government for help. As a result, the economy directly affects the welfare system that the government has put in place to protect the most vulnerable citizens. Although these initiatives are unsuccessful, several policy options might be considered to increase preparation for supporting the populations most vulnerable people.

As a result, the strong economy has been predominantly credited with welfare reforms current effectiveness. States efforts in reducing caseloads and increasing employment for less-skilled workers may be materially hampered by a recession, particularly a severe one that raises unemployment rates. It may be advantageous to make specific legislative changes to guarantee that state welfare-to-work programs continue to function when private-sector employment is less prevalent and provide financial assistance to states during escalating economic needs.

References

Baujard, A. (2021). Values in welfare economics. In The Routledge Handbook of Philosophy of Economics (pp. 211222). Routledge.

Dettlaff, A. J., & Boyd, R. (2020). Racial disproportionality and disparities in the child welfare system: Why they exist, and what can be done to address them. The ANNALS of the American Academy of Political and Social Science, 692(1), 253-274. Web.

Fleurbaey, M. (2018). Welfare economics, risk, and uncertainty. Canadian Journal of Economics/Revue Canadienne Déconomique, 51(1), 5-40. Web.

Haskins, R., & Weidinger, M. (2019). The temporary assistance for needy families program: Time for improvements. The ANNALS of the American Academy of Political and Social Science, 686(1), 286-309. Web.

Heidenreich, M. (2022). Cumulative risks of poverty and exclusion. In Territorial and Social Inequalities in Europe (pp. 201-245). Springer, Cham. Web.

Hiswåls, A. S., Marttila, A., Mälstam, E., & Macassa, G. (2017). Experiences of unemployment and well-being after job loss during economic recession: Results of a qualitative study in east central Sweden. Journal of Public Health Research, 6(3), phr-2017. Web.

Neild, R. (2018). The first serious optimist: AC Pigou and the birth of welfare economics. Web.

Powell, J. H. (2018). Monetary policy and risk management at a time of low inflation and low unemployment. Business Economics, 53(4), 173183. Web.

Traylor, A. M., Ng, L. C., Corrington, A., Skorinko, J. L., & Hebl, M. R. (2020). Expanding research on working women more globally: Identifying and remediating current blindspots. Journal of Social Issues, 76(3), 744-772. Web.

Zolberg, A. R. (2019). Bounded states in a global market: The uses of international labor migrations. In Social theory for a Changing Society (pp. 301-335). Routledge.

Introduction

Consumer behavior theories are models that aim to explain and predict how consumers make decisions and take action. They are based on psychological, sociological, and economic principles and can help businesses understand the factors that affect consumer behavior. The models applicable to marketing strategies regarding mens skincare products include the theory of reasoned action and the psychological hierarchy of effects. These frameworks can help the company create a successful skincare product marketing plan and improve its understanding of its target audience, that is, young men.

Discussion

Consumer behavior theories are not specific to any particular gender, and their principles can be applied to all customers. At the same time, certain factors influence the decision-making processes and actions of male consumers. In particular, men tend to be more influenced by functional and utilitarian considerations when selecting and purchasing products. In this regard, the theory of reasoned action can be applied as a psychological model explaining the decision-making processes of the young male audience. It emphasizes that peoples behavior is influenced by their attitudes, which include their evaluation of particular actions. Furthermore, subjective norms are a pivotal factor that defines mens perception of how important certain behaviors are according to others. In this regard, male consumers choices of skincare products might be influenced by their personal needs and preferences, the recommendations of family members, friends, and skincare professionals, as well as societal expectations.

Conclusion

Furthermore, the psychological hierarchy of effects is another marketing theory that can be applied in the context of mens skincare products. It states that a consumer becomes aware of a product or service, develops an interest in it, evaluates it, tries it, and finally decides to adopt it. This hierarchy of effects is essential for designing a successful marketing strategy as it highlights the main stages in consumers decision-making process. For mens skincare products, it is critical to structure the marketing campaign according to the psychological hierarchy of effects theory to appeal to young male customers.

Introduction

The Capital Asset Pricing Model (CAPM) is a model that shows the relationship between the return and risk of investing in stocks and other securities. The return on securities using this formula is equal to the risk return plus the risk premium (Ayub et al., 2020).

Discussion

The risk premium is determined using the beta (Ayub et al., 2020). CAPMs expected return shows how the assets will pay off in the long run. Beta CAPM shows the volatility of a stock, that is, its price changes in relation to the market (Ayub et al., 2020). Knowing the CAMP formula helps investors assess whether the current price of a security is in line with the stated yield. To do this, an investor needs to know the main variables  the expected return for the market and risk-free asset and beta. CAMP has limitations in usage due to the linear interpretation of risk and return.

Risk Premiums

Risk premiums are income paid to an investor for taking on additional risk as compensation. When calculating it, the expected return on investment is compared with a risk-free interest rate, for example, with a yield on US Treasury bonds of 3.25% (Li & Zinna, 2018). The level of risk an investor is willing to accept depends on their investment goals, so risk and returns can rarely be determined. The risk premium is the amount at which the expected return on a risky asset must exceed the risk-free return to make risky and risk-free assets equally attractive (Li & Zinna, 2018).

Conclusion

Thus, investors decisions will be influenced by whether they are willing to risk their investments for the sake of possible profit or whether they want to receive a stable, predictable income.

References

Ayub, U., Kausar, S., Noreen, U., Zakaria, M., & Jadoon, I. A. (2020). Downside risk-based six-factor capital asset pricing model (CAPM): A new paradigm in asset pricing. Sustainability, 12(17), 6756. Web.

Li, J., & Zinna, G. (2018). The variance risk premium: Components, term structures, and stock return predictability. Journal of Business & Economic Statistics, 36(3), 411-425. Web.

Introduction

This paper argues in line with Smith that high taxes coupled with increased government services and falling within the four taxation criteria that Adam Smith raised is more than just the best approach. It also gives citizens the power to demand service delivery from the government, leading to a dignified life. For a long period, tax experts have differed regarding raising revenues towards funding various government functions and units. Some have questioned whether taxes should be for revenue only, a tool of social control, or both. Others have contemplated whether tax levies should be applied selectively based on the ability to pay or whether all citizens should equally be part of the tax system. Other contentions have suggested that the benefit principle should be central in determining taxation and its rates. In raising the benefit principle discussion, they question the possibility of the government making those who benefit directly from the services or projects charged for the same.

Rostow points out that Smith, in his book, The Wealth of Nations (1776), argued that it is of general public benefit to do such things as defending the country and maintaining the institutions of good government.¹ Consequently, Smiths point was that it is reasonable for the entire population to be part of the tax system, helping the government raise revenues for running its functions and implementing its projects. In so doing, it also gives the citizen legitimacy in demanding certain other things of the tax system, including amounts of tax accruing some relationship to the citizens abilities to pay. Thus, there must be some criteria for determining whether taxes are good for the public or are punitive. The four main characteristics that good taxes must have include they must be certain and not arbitrary, they must be cheap in administering and collection, they must be proportionate to the income and abilities of the citizens to pay, and they must be payable at times and ways convenient to the taxpayers.² A major tax conundrum hit the 20^th and 21^st centuries, contemplating whether higher taxes with many social services or low taxes with few government services is the best approach.

Analysis

One of the main factors characterizing the 20^th and 21^st centuries is the increasing growth of multinational companies. However, this change has come along with one of the most concerning taxation problems, where multinational corporations engage in tax avoidance theatrics. As a result, many governments have been limited in addressing challenges regarding international policies, global pandemics, forced migration, climate change, and increasing inequality.³ Further, Faccio and Ghosh posit that this action by the multinational corporations has played a key role in taking away a tool that could contribute to achieving equality and justice distribution, causing citizens to have increased distrust in the social contract. Faccio and Ghosh estimate that multinationals deprive governments of at least $240 billion annually in fiscal revenues.⁴ This deprivation action disproportionately affects the global south due to its limited revenue sources. While tax evasion cannot be directly linked to lower taxes, it causes the government to collect below its targets, affecting their service delivery, which can be linked to lower tax policy. This practice is akin to multinationals shifting their profits to jurisdictions with low or zero tax rates, as many established companies from the United States and Europe moved their operations to China in the 1980s.⁵ Among the inducements that motivated increased foreign direct investment in China was the tax holidays, even though many multinationals were unsuccessful initially.⁶ While this practice can lead to increased employment levels, it undermines the tax base of countries where they carry out their activities. In the long run, these practices exploit resources in the countries they operate while leaving them in a worse position.

High taxes are critical in motivating demand and consumption if the governments can show proof of their value to the public. Tax issues and their impact on market prices have always formed one of the fundamental factors surrounding the discussion of pricing theory. Komleh argued that besides governments using taxes to cover their expenditures within the budget, taxes also are critical in controlling the market and eliminating defects.⁷ This argument is also supported by Kolmar, who argued that increasing taxes affects demand negatively, eventually hurting a given countrys economy in general. He also argued that the reverse is true, associating tax cuts with a positive impact on demand and the economy.⁸ However, learning from President Reagan, it may be only partially true. When Ronald Reagan was running for president in 1980, he argued that the economic ills of America were connected to oppressive taxes and big government. Consequently, upon clinching the seat, he implemented a policy cutting taxes by 25% in 1981.⁹ However, this policy did not bear fruit for a while, leading the country into inflation and a recession that lasted for about two years. Thus, it is only partially true that reducing taxes impacts the economy positively. On the contrary, Boulianne points out that constantly engaging citizens in policy-making through civic education and following through to implement these policies can help increase citizens trust in the government.¹⁰ Trust is a vital component in any level of human relationship. Thus, a situation where the government adequately engages the public in increasing taxes coupled with increased delivery of quality services would result in increased motivation for consumption by the citizens.

High taxes are key in reducing economic inequalities existing in different countries and various parts of the globe, in general. Over the last half a century, there has been a dramatic decrease in taxes on the rich across the global north countries. At the same time, the world has witnessed a sharp increase in income inequality over the same period. While there is an ongoing debate in academic and political spheres over the economic soundness of these changes in tax policy, Hope and Limberg found out from their study that cutting taxes on the rich contributes to increasing income inequality.¹¹ Thus, it implies that the rich will continue holding on to their high incomes while the poor are charged higher taxes proportionate to their income. Consequently, it put the government in a precarious position to overburden the poor with punitive taxes that disobey the Smith taxation rules or go slow in delivering social services. Either of the decisions disadvantages the less fortunate in society, which then ends up exacerbating the inequality crisis in a given country. The soundest tax policy that can help reduce income inequalities is charging higher taxes on high-income households than low-income households.

An increase in the tax burden can indicate positive economic development. Rostow describes tax burden as the percentage of a countrys Gross Domestic Product (GDP) collected in tax.¹² For this increase to be viable and sustainable for the economy and hold the argument plausible, it must first ensure that it confines with the taxation criteria Adam Smith highlighted. As Piketty highlights, Sweden presents a convincing case of the extent of the positive impact of the increase in the tax burden. While the United States and Sweden have similar GDP per capita, the tax burden in the United States is almost half that of Sweden, standing at 25% and 45%, respectively.¹³ The higher tax burden in Sweden reflects Swedens well-organized and extensive welfare state, comprising free education and health care, as opposed to the United States. The stability of the welfare state in Sweden plays a significant role in reducing uncertainty and such problems as bankruptcy. Consequently, backing up the high tax burden and increasing taxation with the provision of quality services is motivation enough for citizens wanting to help the government deliver more services by becoming cheerful taxpayers.

Higher taxes can reduce the demand for leisure and increase the supply of taxed labor through income effects. According to Faccio and Gosh, the recent public economics literature entails an apparent consensus alleging that income effects reduce the costs of raising revenues.¹⁴ Consequently, the reduced costs of raising revenues increase the desirable public good provision level. However, it is critical to consider the income effects of taxes symmetrically with the provisions of public goods. Thus, the cases where the public can perceive the social impacts of their taxes paid, such as increased social amenities, and increased subsidies on the cost of starting a business, it is easier for the general public to want to be part of the contributors to the wellbeing of the country. Thus, most of the public will develop a desire to shun leisure and avail their talents for use in various areas that can help contribute to the tax revenues that a country can collect.

Increasing necessary funds for implementing its projects, the government should consider raising the personal income tax rates on the highest income as one of the most effective ways. Increasing high-income tax helps to generate substantial revenues for investment in people and communities that provide economic and social benefits over a long period.¹⁵ The increase in high-income tax would also help to prevent what Keynes referred to as the speculative bubble. Thus, Keynes suggested that preventing speculating a bubble which is critical in the effort to prevent depression, calls for preventing the accumulation of too much money in the hands of too few people.¹⁶ Thus, a high-income tax would ensure the continued circulation of money in the economy. In the United States, minimizing or preventing harmful budget cuts and investing in ambitious new projects have been among the major concerns of the majority of states. Such ambitious projects of great interest to the states and the people include expanding early education, strengthening rainy day funds that help prepare for the next recession, infrastructure improvement, and boosting college access.¹⁷ About 41 states adopted the policy to raise personal income tax rates to achieve these projects. This sustained support for the growth of the public building blocks through high personal tax rates goes a long way in helping the states improve the residents well-being, build sustainable, prosperous economies, and expand opportunities that cater to all races across the states. Thus, high personal income rates in such a scenario are not a punishment but an uncomfortable investment that contributes greatly to the societal good and lessens the pressure on the net income.

Charging citizens with high taxes gives them the power to demand increased government services. In his work, Prichard presents the fiscal contract arguing that an arrangement that includes citizens yielding their rights for the sake of the collective interest, they should expect the central governing authority to deliver protection and other public goods to society in return.¹⁸ Taxation provides the most practical form of fiscal contract where the citizens forfeit part of their personal assets to the government in return for services. Consequently, on the one hand, as the government charges higher taxes on the rich as a percentage of GDP, the rich should demand accountability from the government for more protection of property rights. On the other hand, the more the government taxes the poor, the more the poor are eligible to hold the government accountable by providing basic public services.¹⁹ With increased public service, the less advantaged citizens can have access to these basic services at a reduced or no cost, hence reducing the propensity to lead undignified life. Thus, the citizens are justified to demand accountability from the government to which they forfeit their personal assets in the form of high taxes in the hope that the government will be responsible and shrewd in using their taxes.

On the contrary, the proponents of low taxes with reduced government services argue that reducing taxes helps to increase the consumers spending power. Consequently, it increases aggregate demand and leads to high economic growth. On the flip side, they also suggest that reduced taxes can increase incentives to work that eventually lead to higher productivity and increased supply. This argument was strongly advanced by Shumpert, one of the leading proponents of tax cuts and a great critic of the high taxes, holding that the high-income tax reduces savings and hence is a disincentive to work.²⁰ However, Harvey argued in his work that the effect of tax cuts on the economy depends on the financing of the tax cuts, whether the reduced tax rates increase the willingness to work and productivity, and the state of the economy.²¹ The proponents of lower taxes and reduced government social services fail to consider this taxation policys drawbacks. Besides translating into higher economic growth due to increased consumer spending, tax cuts can lead to government borrowing. There is a high likelihood of tax cuts resulting in lower tax revenues, forcing the government to resort to higher borrowing, thus, bulging the public debt burden. With increased public debt, it reverts the pressure on the citizen, and the most disadvantaged are the less fortunate, who, besides not having the opportunity of accessing government social services, they have to deal with the fact that their generations may continue in perpetual poverty due to paying off their income to offset the public debt.

Conclusion

In the 20^th and 21^st centuries, high taxes coupled with many social services are more sensible than low taxes with few government services. While high taxes bear the risk of destabilizing the economy and entrenching further income inequality among the people, the criteria of Adam Smith can help the government to avert such risks. It can then turn around high taxes to help provide high-quality social services such as free health care and education, address income inequalities, and motivate demand among the people. The argument of the proponents of lower taxes coupled with fewer government social services is enticing but dangerous. It can accrue positives, but it is not sustainable. It risks causing many generations to be in perpetual poverty due to the high cost of living resulting from unavailable relatively cheaper government social services such as healthcare facilities and schools. It can also lead to increased public debt due to high government borrowings that can overburden citizens, especially the less fortunate. Thus, increasing tax rates within the conditions that Adam Smith highlighted and ensuring that government provides the necessary social services is economically and socially appealing as opposed to reducing tax rates and taking away government social services.

Works Cited

Boulianne, Shelley. Building faith in democracy: Deliberative events, political trust and efficacy. Political Studies 67.1 (2019): 4-30.

Faccio, Tommaso, and Gosh, Jayati. Taxing Multinationals: A Fundamental Shift Is Under Way. Intereconomics 56 (2021).

Harvey, David. A brief history of neoliberalism. Oxford University Press, USA, 2007.

Hope, David, and Julian Limberg. The economic consequences of major tax cuts for the rich. Socio-Economic Review (2022).

Kolmar, Martin. Principles of microeconomics. Springer International Publishing AG, 2017.

Komleh, Ramin Abolghasemi. The influence of taxation on supply, demand and market price. The University of Milan. (2018).

Piketty, Thomas. Capital in the twenty-first century. Capital in the twenty-first century. Harvard University Press, 2014.

Prichard, Wilson. Tax, politics, and the social contract in Africa. Oxford research encyclopedia of politics. 2019.

Rostow, Walt Whitman. The stages of economic growth. The economic history review 12.1 (1959): 1-16.

Schumpeter, Joseph A. The fundamental phenomenon of economic development. The theory of economic development. Routledge, 2017. 57-82.

Skidelsky, Robert. John Maynard Keynes: Economist, Philosopher, Statesman. Macmillan, 2003.

Tharpe, Wesley. Raising State Income Tax Rates at the Top a Sensible Way to Fund Key Investments. Washington, DC. Web.

Footnotes

1. Rostow, Walt Whitman. The stages of economic growth. The economic history review 12.1 (1959): 1-16.
2. Faccio, Tommaso, and Gosh, Jayati. Taxing Multinationals: A Fundamental Shift Is Under Way. Intereconomics 56 (2021).
3. Faccio, Tommaso, and Gosh, Jayati. Intereconomics 56 (2021).
4. Faccio, Tommaso, and Gosh, Jayati. Intereconomics 56 (2021).
5. Harvey, David. A brief history of neoliberalism. Oxford University Press, USA, 2007.
6. Harvey, David. Oxford University Press, USA, 2007.
7. Komleh, Ramin Abolghasemi. The influence of taxation on supply, demand and market price. The University of Milan. (2018).
8. Kolmar, Martin. Principles of microeconomics. Springer International Publishing AG, 2017.
9. Hope, David, and Julian Limberg. The economic consequences of major tax cuts for the rich. Socio-Economic Review (2022).
10. Boulianne, Shelley. Building faith in democracy: Deliberative events, political trust and efficacy. Political Studies 67.1 (2019): 4-30.
11. Hope, David, and Julian Limberg. The economic consequences of major tax cuts for the rich. Socio-Economic Review (2022).
12. Rostow, Walt Whitman. The economic history review 12.1 (1959): 1-16.
13. Piketty, Thomas. Capital in the twenty-first century. Capital in the twenty-first century. Harvard University Press, 2014.
14. Faccio, Tommaso, and Gosh, Jayati. Intereconomics 56 (2021).
15. Tharpe, Wesley. Raising State Income Tax Rates at the Top a Sensible Way to Fund Key Investments. Washington, DC. Web.
16. Skidelsky, Robert. John Maynard Keynes: Economist, Philosopher, Statesman. Macmillan, 2003.
17. Komleh, Ramin Abolghasemi. The University of Milan. (2018).
18. Prichard, Wilson. Tax, politics, and the social contract in Africa. Oxford research encyclopedia of politics. 2019.
19. Prichard, Wilson. Oxford research encyclopedia of politics. 2019.
20. Schumpeter, Joseph A. The fundamental phenomenon of economic development. The theory of economic development. Routledge, 2017. 57-82.
21. Harvey, David. A brief history of neoliberalism. Oxford University Press, USA, 2007.

Romanias GDP per capita has grown over the past ten years but remains much lower than the EU average compared to that of the European Union leader, Germany. So far, Romania ranks, respectively, penultimate in the EU in terms of actual per capita individual consumption, which in 2018 was 59 percent lower than the European average (Ionescu, 2018). Romania has one of the lowest life expectancies in the EU (10 years lower than the European Union average), the highest mortality rate, and the highest morbidity rate. Bulgaria and Romania have the lowest wage rates in the European Union. Fifteen years ago, the difference between these rates in the countries in question and the EU averaged 1 to 25, but since 2017, it has decreased and is now about 1 to 5 (Ionescu, 2018). At the same time, labor productivity remains unchanged: it is still the lowest in the EU. However, maintaining low wages has a positive effect: it keeps many small and medium-sized enterprises, which are the backbone of the economies of Bulgaria and Romania, afloat.

Romanias low socioeconomic development is due to problems in its national economy, which still need to be solved before it acceded to the EU. These were exacerbated during the global financial and economic crisis and persisted to the present day. The main problem is the low competitiveness of the economy of the country in question. The second most important problem is the investment deficit, which impedes the solution of the previous one. The third problem is the Romanian economys strong financial, structural, and export dependence on the EU (Hatmanu et al., 2020). The products of most of the enterprises of the country in question are considered inferior in quality and production costs to those of the European companies. Many enterprises should have increased their exports in the conditions of the free common European market but also gave up their positions in the domestic market, unable to withstand the high competition with European producers.

Romania is a middle-income country, so its macroeconomic indicators are appropriate. GDP per capita at PPP in 2021 was $35,869 international dollars (World Bank, 2023). Only two EU countries have even lower GDP per capita. As in most EU Central and Eastern European countries, the manufacturing sector plays an important role in Romanias economy. Its share in gross value added was 19.9% in 2018, the fifth highest in the EU (World Bank, 2023). At the same time, Romanias economy, unlike the EU CEE countries, could be more export-oriented. The share of exports in GDP in 2018 was only 41.6%, an unusually low figure for a middle-income EU country (World Bank, 2023). Commodity diversification of Romanias exports is average: the bulk of exports in 2017 came from automobiles and electrical equipment, more than 15% of exports for each item (Angelidis et al., 2020). Diversification of exports by foreign trade partners is also average: Germany accounted for more than 20% of shipments, and Italy for more than 10% (Angelidis et al., 2020). Given the countrys declining level of participation in international trade, its economy is characterized by a higher dependence on domestic demand.

Several indicators depend on Romanias geographic location, exactly on the periphery of the EU, which makes it difficult for the country to participate in intra-EU trade. Household consumption accounted for 62.4 percent of GDP in 2018, the fifth-highest result in the EU (World Bank, 2023). Since 2017, the economy has grown at an average rate of 5.3%, the third-highest growth rate among EU countries (Ionescu, 2018). This is primarily due to domestic consumption on the back of strong growth in real wages. According to Romanias National Institute of Statistics, net real income has grown an average of 9.8 percent over the past five years (Bran et al., 2018). In 2019, the growth rate remained high, as the relatively low share of exports in GDP partially offset the effects of the global economic slowdown.

Reference List

Angelidis, G. et al. (2020) Competitive conditions in global value chain networks: An assessment using entropy and network analysis, Entropy, 22(10), p. 1068. Web.

Bran, F., Alpopi, C. and Burlcu, S. (2018) Territorial development  disparities between the developed and the least developed areas of Romania, The 14th Economic International Conference: Strategies and Development Policies of Territories: International, Country, Region, City, Location Challenges, 2018, Stefan cel Mare University of Suceava, Romania [Preprint]. Web.

Hatmanu, M., Cautisanu, C. and Ifrim, M. (2020) The impact of interest rate, exchange rate and European business climate on economic growth in Romania: An ARDL approach with structural breaks, Sustainability, 12(7), p. 2798. Web.

Ionescu, G. (2018) A presentation of a set of macroeconomic indicators to evaluate the economic sustainability in Romania, Studies in Business and Economics, 13(3), pp. 4562. Web.

World Bank. (2023) GDP per capita, PPP (current international $)  Romania (2021) Data. Web.

Introduction

The federal and Georgia budgets are both financial blueprints that detail how their governments will spend the funds. The President and Congress developed the federal budget, which is the budgetary blueprint for the United States government. Individual income taxes account for 51% of the federal budget, estimated to reach $4.5 trillion in 2023. (Kanso, 2022).

Discussion

It is separated into two classifications: discretionary spending (military, schooling, and infrastructure) and required expenditure (Social Security, Medicare, and Medicaid). The government budget also includes revenues from taxes, fees, and other sources. Both financial plans differ significantly in terms of the breadth of their expenditure, the size of the government entities they serve, and the method by which they are developed.

On the other hand, the Georgia budget is the financial plan for Georgias state government. It is created by the Governor and the Georgia General Assembly and outlines how the state will raise and spend money for the upcoming fiscal year. The Georgia budget includes revenues from taxes, fees, other sources, and federal funds allocated to the state (Kanso, 2022). The budget is divided into several categories: education, health, human services, public safety, and transportation.

The federal government has a greater budget and spends more broadly on things like the military, education, and transportation (Kanso, 2022). On the other hand, the Georgia budget is more oriented on the states particular requirements and objectives, such as schooling, healthcare, and public security. Another significant distinction is the method through which they are produced. The federal budget process is more complicated, involving the presidents budget plan, legislative hearings, and numerous votes in both chambers of Congress before the budget is approved (Kanso, 2022). The budget process in Georgia is likewise complicated, although it is more simplified, with the Governors budget proposal, legislative hearings, and votes in the Georgia General Assembly before the budget is passed.

Conclusion

To summarize, while both are financial plans outlining how monies will be spent, they differ greatly in the above-mentioned aspects. The federal budget is larger and more complicated, whereas the Georgia budget is more focused on the states specific needs and priorities, with a simpler approach.

Reference

Kanso, D. (2022). Georgia revenue Primer for State Fiscal year 2023. Georgia Budget and Policy Institute. Web.

Today, all organizations are responsible for creating specific financial statements representing all financial activities and performances that might affect their businesses. Different types of expenses are necessary for investors to identify the main features and changes in the companys financial health and potential earnings. Accruals and payables are common accounting entries that should be discussed in financial statements, and their differences, adjusting practices, and ethical considerations will be discussed in this paper.

Understanding the differences between accruals and payables is vital in financial operations. Although both expenses presuppose the necessity to pay money, it is important to understand that accruals can be closed only after a particular accounting period, and payables should be paid within a chosen period (Hinojosa). Their fundamental difference is in their nature: accruals cover all earned revenues that have not been declared at the moment, while payables are reported debts that have not been paid at the moment.

The implications in the financial presentation of a company depend on the differences in accruals and payables. An accrual accounting method means the possibility of using a service prior to its payment without obligations, and a payable accounting method is characterized by a specific financial obligation before a creditor (Hinojosa). Thus, accruals are preferable and more accurate compared to payables as it offers more possibilities to present the financial situation of the company and underline annual expenses within a particular period.

Some adjustments are recommended for accruals and payables to introduce specific and clear accounting reports. For example, if a transition between different accounting periods is inevitable, accruals must be adjusted to cover incurred expenses. Another example is related to situations when the expense for one purchase should be covered within several periods. Finally, any adjustment or evaluation of accruals and payables is associated with ethical considerations about accrual calculations that emerge from time to time and affect the quality of the financial presentation of an organization. They include fraud or false reporting, a lack of transparency or confidentiality, and misleading reporting.

In conclusion, accruals and payables play an important role in creating strong and clear financial statements. All these issues, like the purposes of the chosen expenses, possible adjustments, and ethical issues, promote a better understanding of the differences and main features of accruals and payables in financial statements. Financial accounting is a complex discipline, and the use of definitions and comparisons facilitates the steps in formulating the necessary statements.

Work Cited

Hinojosa, Anastasia. Accrued Expenses vs. Accounts Payable: Key Differences. Indeed, Web.

Introduction: Foreign Exchange Calculations

No matter what the underlying spot prices are on April 1st, the corporation has agreed to sell its 4,000 units on January 1st for $1.25 million. This is dangerously near the point where the business stops losing money. The mathematics computation is shown below;

The corporation locks in a foreign exchange rate for its projected 1.25 million MYR in sales on January 1^st using the forward rate on that day. This means that on April 1st, the company was obligated to convert 1.25 million MYR at the forward rate set on January 1^st. This is the optimal case for the company since it results in a higher profit of $36,240, or $9.06 per unit. Here are the results of these calculations:

Spend or Save

When deciding whether or not to use foreign currency to purchase raw commodities, the corporation should prioritize the bottom line. The spread between the forward rate and the spot rate is the primary metric by which foreign exchange profits are calculated (Dunung, 2020). Based on the facts, the corporation may profitably lock its 4,000 units and sell them on April 1^st at a forward rate contract rate of $0.317/MYR. In order to protect itself from fluctuations in the value of its currency on the foreign exchange market, the corporation may choose to consider locking its cash for four months.

Conclusion

Financial exchange risks in the market are illustrated above, highlighting the importance of which businesses should think. Financial exchange risk may be mitigated by using forward rate contracts, which are made possible through hedging (Leonidou & Hultman, 2018). In this case, the corporation would not have earned the $36,240 profit if it had utilized the spot rate on April 1^st. Considering foreign exchange risk is important in ensuring a companys financial success. With the fluctuation of currency rates and values, it is essential for a company to be aware of the potential gains and losses and to create strategies to manage risks.

References

Dunung, S. (2020). Global Business Management. Boston, MA: FlatWorld

Leonidou, C. N., & Hultman, M. (2018). Global marketing in business-to-business contexts: Challenges, developments, and opportunities. Industrial Marketing Management. Web.

Merkert, R., & Swidan, H. (2019). Flying with (out) a safety net: Financial hedging in the airline industry. Transportation Research Part E: Logistics and Transportation Review, 127, 206-219.

The United States government agency in charge of the countrys securities business is the Securities and Exchange Commission (SEC). It keeps an eye on both transactions and the acts of financial experts. Its goals are to uphold fairness, integrity, and transparency; stop fraud and other dishonest behavior; and guarantee efficient and well-ordered markets (SEC.gov | HOME, 2017). The SEC is tasked with a variety of duties under federal securities laws and regulations, including the following: overseeing securities trading in U.S. equity markets, keeping an eye on the U.S. fixed-income market. Other responsibilities include examining the financial disclosures and statements of public companies, supervising registered market participants and keep an eye on securities exchanges, credit rating and clearing organizations, and other entities.

The fact that American families own $38 trillion worth of stocks, or more than 59 percent of the U.S. equity market, directly or indirectly through mutual funds, retirement accounts, and other assets is reflected in the SECs focus on Main Street investors (SEC.gov | HOME, 2017). The federal securities rules that the SEC is responsible for enforcing are founded on the clear-cut idea that everyone should be treated equally and have access to information about investments and the people who sell them. In order to accomplish this, they mandate that public companies, fund and asset managers, investment experts, and other market participants routinely disclose significant financial and other information (SEC.gov | HOME, 2017). This gives investors the timely, accurate, and complete information they need to feel confident and well-informed when deciding when or where to invest. By zealously upholding federal securities laws, the SEC defends investors by holding violators accountable and discouraging further misbehavior.

The year 2022 saw one of the most unpredictable stock markets ever. The Nasdaq 100 has dropped by about 30% YTD, while the S&P 500 has lost close to 20% so far YTD (DeGalbo, 2022). Growth stocks have also suffered, with many down 50 to 80% year to date (DeGalbo, 2022). The current volatility has been linked to a wide range of variables. The market is in a tailspin due in large part to the inflation rates, which are increasing year after year (DeGalbo, 2022). The ongoing conflict in Ukraine is a significant contributing cause to market volatility (DeGalbo, 2022). Markets dislike uncertainty and instability, both of which are exacerbated by these conflicts, and they surely do not like any of those things.

References

DeGalbo, A. (2022). Why the Stock Market Has Been So Volatile in 2022. Entrepreneur. Web.

SEC.gov | HOME. (2017). Web.