Category: Equity

Introduction

Briarwood Medical Equipment (BME), is facing a dilemma of raising capital for its expansion needs. Given that they need to raise an amount of $250 thousand to finance the expansion and the options available, which are raising new shares and obtaining external sources of finance. It appears that they would have to settle for a hybrid between equity and debt. This paper, therefore, seeks to analyze the pros and cons of raising capital through equity and debt.

Equity

Equity is the share capital and retained earnings (Investopedia, 2011). In the case of BME that would be the value of its shares. The case scenario illustrates that BME can only raise 49 percent of its expansion financial requirements by issuing 125,000 new shares valued at $1each. Though this is still insufficient to fully cater to the expansion budget, issuing a new share has pros and cons attached to it.

Pros Of Issuing New Shares

Issuing new shares allows the firm to acquire debt they are not legally obliged to pay back. They would also raise this type of capital without the need for collateral; unlike bank loans that require collateral. The firm is also not obliged to pay dividends but would do so of their own volition. This would enable the firm to buy time in making payments and use the money they would otherwise have to pay lofty interest rates for internal strengthening and expansion (Holmen M et al., 2008).

Cons Of Issuing New Shares

The cost of equity faces a myriad of uncertainty. This is because its dividends are pegged on the profits available. In times when the firm is performing very well, the dividend expected may be higher than the external cost of sourcing capital which has fixed interest rates. Issuing new shares also dilutes the ownership of the company as additional owners come on board. And issuing new shares may be costly as it entails advertisements cost and high administration expenses related to issuing new shares.

Debt

Debt may include bank loans and debentures issued against specific company assets and loans from financial institutions. In the case of BME, it has to raise 51 percent of its capital requirements through external sources. This like the case with shares has its share of advantages and disadvantages.

Advantages of Debt

Debt usually carries a fixed interest rate and is not subject to uncertainty. For a firm that has strong liquidity history, acquiring debt may be an easy option and given that its risk of default is lower, it maybe is able to negotiate a lower interest rate. Acquiring this type of finance would also be cheaper as it involves just requesting a viable institution or making a single application. Also having debt and paying it promptly increases the firms credit rating and the firm may use this good rating to negotiate larger loans at better rates in the future (Das, 2011).

Disadvantages Of Debt

Debt carries fixed rates and fixed payment dates. Failure to comply may have devastating effects. These effects include the firm suddenly having a poor credit rating. It may also face the risk of bankruptcy and liquidation. In case of one single default, loan payment the fines may be dear and the cost of debt may even exceed the initial amount borrowed.

Conclusion

The selection of choice between raising debt and equity is dependent on the inherent circumstances. In the case of BME, it would have to settle for both options to raise its intended capital.

References

Das B., (2011). Business Studies. The merits and demerits of equity shares as a source of finance. Web.

Holmen M et al., (2008). Inside shareholders effective tax rates and dividends. Web.

Investopedia, (2011). Equity. Web.

I work in a company dealing with horticultural products. The two main categories of our products are fruits and flowers. The company imports the products from countries where the products are cheaply sourced. We then distribute the products locally to wholesalers and retailers. The companys most important assets are warehouses fitted with cooling systems as well as delivery vans or Lorries fitted with cooling systems because most of the products are perishable. The company was started in the backdrop of suppressed demand caused by the onset of the world economic crisis.

The fact that the domestic economy is recovering from the recession means has put a strain on the companys ability to fully meet the demand of the products among the customers. The company is experiencing a high surge in demand due to the rise in incomes among households. The existing stocks cannot fully cope with the orders placed by customers. The companys warehouses are constantly running out of stocks leading to customer frustration. In addition, estimates show that the high demand cannot be fully utilized within the capacity of the existing warehouses. The situation means that two issues are most urgent at the moment. First is the need to increase stocks by boosting the working capital to make sure that the existing facilities are utilized to the maximum. This is a short-term measure requiring urgent attention. Secondly, there is the need to expand the companys air-conditioned warehouses. This is a long-term investment. A market analysis shows that the company may need to triple its storage capacity in the next four years.

The most appropriate source of finance for the expansion of stocks is through a short-term loan from a bank. The loan will enable the company to boost stocks promptly a fact which will improve the companys ability to meet customers orders. This will lead to a rise in the profitability of the company hence the charges accompanying the loan will be easy to meet. I feel that a short term loan from a bank will be most appropriate due the fact that it is easy to access and utilize. Again, the loan will directly result in an increase in returns for the company a situation which will enable the company not only repay the debt but also build on profits which can later be ploughed back in future (Short term finance, par3).

For the expansion of air conditioned warehouse requires huge sums of money to finance. The most common ways of funding such long-term investments are long-term loans, bonds and issuance of equity. I recommend that the company issues additional equity rather than engage in long term loans. The main reason is that the funding introduces no extra risks to the company bearing in mind the long-term element. The extra equity does not attract mandatory charges unlike bank loans hence giving better flexibility in the companys finances. The new shareholders will expect returns for their investments based on the companys performance. Long-term debts will impose costs to the company. The fact that the market expectations are high at the moment does not guarantee that the future will remain this way. The large sums required means that the repayment period will be long and markets are prone to change. It is thus more secure to issue equities (Long Term Sources of Finance, Par2).

Works Cited

Long Term Sources of Finance. Bized. 2010. Web.

Short term finance. Bized. 2010. Web.

Financing decisions are some of the major decisions that the management of a company must make. There are two sources of capital for any company, they are debt and equity financing. According to Gotthilf, (1997), Debt financing; a company acquires new capital by borrowing from external sources i.e. by paying a price called interest on the borrowing. On the other hand, Damodaran (2007) claims that Equity financing a company obtains its capital financing from the existing shareholders who are the owners of the company either by floating new shares or by reinvesting the retained earnings. The major consideration in the choice of financing is the cost of obtaining the additional funds together with the expectations and the legal requirement.

The company is faced with the challenge of expansion of its operations in order to meet the high power demand. It is also of concern for the company to realize earnings considering that the previous losses that the company has incurred are a threat to its going concern. The management is therefore in a bid to correct the negative earnings of the company by acquiring additional capital to enable it to expand and improve its efficiency.

In the year 2003, the management of AMSCS decided to raise funds through equity financing. The reasons that might have propelled the company in the above financing means are: Equity financing was considered the cheapest source of financing given that debt interest would be high. Debt holders would charge high-interest rates because of the risk of repayment as the company realized losses. The additional risk could only be accepted on the condition that the price is high. The management, therefore, was justified in adopting this source of financing

Equity financing is also prompted by the desire to retain control. The shareholders of the company will not prefer the conditions that are associated with the debt capital. Most debt capital is given on the condition that the amount is invested in a particular manner and this would not augur well with the shareholders plight. The management, therefore, was justified in issuing equity financing and not debt.

The third factor that prompted the management of AMSC to prefer equity is also to reduce the risk of the company being insolvent and hence taken into receivership. This would be as a result of the company not being in a position to meet its maturing obligations as they fall due. Due to this, the debt holders would be in a position to bring a liquidation case against the company and therefore terminate its operation. The management, therefore, was right in equity financing.

The desire to reduce the expenses of management is as well a factor that instigated the management decision.interest expenses that would be paid to the bondholders would reduce the operating profits and therefore increase the losses of the company.management decision was therefore driven by the urge to prevent further increase in the losses of the company.

In the capital decision, con sudations must also be given to the government regulations. In some cases, the government restricts the proportion of debt-equity ratio that should be followed by the company. The objective of this regulation is to reduce the risk of gearing of a company and also to ensure that the capital adequacy requirement is adhered to. The management is therefore intending to reduce the gearing level by increasing the proportion of equity on the capital ratio. It could also be aimed at correcting the required capital ratio of the company.

In as much as the decision of the AMSC management is justified in this perspective, there are several factors that ought to have been integrated into the financing decision. To begin with, the management would have considered other cheaper means of obtaining debt. This source would therefore result in a reduced marginal cost of capital hence maximizing the shareholders worth. Again it is important to note that debt financing is subjected to tax shield benefits. The interest which is the price paid for borrowed money is considered as an expense hence deducted from the operating profit thereby reducing the profit on which tax is levied. This view would have increased the value of the firm in the long run.

The idea of issuing new shares would also reduce the control of the existing shareholders by having new owners. Debt financing ensures that the control by the existing shareholders is retained since bondholders are not owners and therefore do not participate in management. Equity financing may also result in an increase in retained profits which may compromise the need of shareholders to get dividends as a return for their investments. Debt financing solves this problem by providing external funds hence allowing the company to pay prompt dividend returns.

Moreover, the conditions that are associated with debt finance would ensure that the management improves its managerial decisions. Bankers and investors who offer their loan services always provide professional advice to the company making sure that they conform to the objectives and enhancing their corporate governance. Apart from this, the formalities for obtaining debt are simple and faster compared to the issue of new shares. When issuing new shares, various costs are to be incurred i.e. when raising new shares the floatation cost was incurred by AMSC Company. This cost is high compared to the cost of obtaining debt.

Peterson (1999) argues that other reasons for debt financing may include inter alia the incapability of the existing shareholders to exercise their rights in a rights issue. Again, the fact that the company is realizing losses would mean that debt financing would be not a viable way of obtaining finance. The management of AMSC was therefore faced with the tough decision of selecting between debt and equity finance.

In conclusion, I would support the decision of the management of AMSC to prefer equity to debt financing. This is the best way it could obtain the finance and expand on its activities of generating energy in the United States (Harvey, 2002). The importance of the activities of the company is crucial to the economy of the state and therefore the government interest in the performance is also justified. The companys further decision to acquire some profit-making firms i9s is also a good decision as it minimizes the loss that results from the company operation. The idea also helps to diversify the companys activities which would mitigate the future losses anticipated.

Finally, the growth of the company in the future operation is indispensable as it plays a major role in the economy. This future existence and growth would in the long run impact positively on the earnings of the firm. Capital structure decisions are therefore important as huge capital projects which are irreversible are made. It requires competent management and prudent decisions for success to be realized.

Reference list

Damodaran, A. (2007). The Debt-Equity Trade Off: Stern School of Business. Retrieved August 2, 2007 from: Capital Structure Decision.

Gotthilf, D. L. (1997). Long-term borrowing techniques. Treasurers and Controllers Desk Book. American Management Association.

Harvey, C. (2002). How do CFOs make capital structure and budgeting decisions. Retrieved August 1, 2007 from: Journal of Applied Corporate Finance, 15(1), 8- 23.

Peterson, P. (1999). Analysis of Financial Statements. New York: Wiley.

Introduction

Fairness is one of the main criteria for the validity of employee compensation. The following memo examines the concept of the market-based compensation program, defines the roles of the external competitiveness and internal equity, and suggests an approach to balancing them. The suggestion is substantiated with an example of the company which successfully uses a balanced approach. An example of the company which fails in introducing internal equity is also presented, with the suggestions of the aftermath of such negligence.

Defining Market-Based Compensation Program

A compensation program needs to be attractive for the employee while at the same time objective in terms of reward. In other words, an organization must fairly compensate its workers by providing incentives that reward their effort, expertise, competence, determination, and skill. Such fairness can be achieved in several ways, with the market-based approach being the most evident one. A program that uses pricing on the job market to determine the size of salaries and incentives is thus called a market-based compensation program (Armstrong, Brown, & Reilly, 2011).

Several techniques can be used to determine an average market compensation size. The easiest one involves simple non-systematic research of the closest competitors. Such an approach creates a range of serious barriers and demands several adjustments to produce meaningful data. For instance, the sample selected for such inquiry may be small or the process of selection may involve bias, the size, and market share of the competing companies can distort the picture, and some parts of the reward package may not be evident or, more commonly, difficult to measure and quantify (Armstrong, 2012). For these reasons, the inquiry usually involves benchmarking tools that evaluate multiple aspects of the compensation programs on the market to produce relevant information.

Balancing External Competitiveness & Internal Equity

Two factors that define the fairness of compensation are external competitiveness and internal equity. Both are important to foster loyalty and motivate the employees. While different views exist regarding which of the two factors needs to be prioritized, most scholars emphasize the need to find a balance between them for the best result.

External competitiveness describes the ratio of the salaries and compensations characteristic for certain jobs in the company to the common compensation rates of similar entities on the market. In simple terms, the higher the company evaluates the labor of its employees, the more externally competitive it is. This factor has two effects. First, the company which offers the above market pay is more attractive for the applicants and thus has a better supply of workforce to choose from. Second, such a company has higher retention rates since the employees are less likely to be dissatisfied with wages.

Internal equity is determined by differences between salaries within the company. The more equalized the compensation is among workers, the higher the equity. On the other hand, if the gap in wages is noticeable, the staff is more likely to suspect that they are treated unfairly. Internal equity is more nuanced and complex than external competitiveness. First, the concept understandably presumes the comparison of positions within the same workload, a range of responsibilities, and required competencies. Naturally, not all of these characteristics are easily measured.

Thus, the employees usually perceive the competencies, responsibilities, and skills on an intuitive basis, which is only appropriate in some instances. Nevertheless, this perception still influences the motivation of individuals. For instance, an employee who feels he is paid less than his co-worker but does his work better is expected to either be dissatisfied or reluctant to increase productivity (Pedulla, 2013). Alternatively, an employee who has a higher salary than that of his peers without a clear understanding of the reasons behind it may be stressed by the guilt he feels towards his co-workers. Notably, in both situations, it is enough for the employee to feel the inequity rather than to possess reliable information about it. Thus, it is obvious that the two aspects must be balanced to avoid dissatisfaction, foster loyalty, and promote commitment.

One of the ways to unite them into a meaningful and comprehensible format is to develop a set of standards defining the requirements for each position and benchmarks for performance evaluation (Dow, Morajda, & McMullen, 2006). Such a set will improve external competitiveness by presenting a clear and transparent image of what is expected of the new applicant, which, in turn, will eliminate ambiguities and streamline hiring practices. On the other hand, the benchmarks and requirements can be used to illustrate the reasons behind changes in payment and other rewards for each employee. Additionally, the open and accessible nature of the guidelines will allow the staff to evaluate the fairness of compensation independently should such need arise.

The preferred format of such standards is a set of characteristics rather than a list of descriptions for each position. Such form will improve the flexibility and adaptability of the document to a wider scope of jobs and improve overall equity. Currently, the diversity of positions and the variations introduced by different companies make the external evaluation extremely time- and resource-consuming. Admittedly, the cumulative nature of the suggested procedure can be an additional challenge for the employees, but this drawback can be overcome with some training and will eventually lead to improvement. Thus, it should be viewed as an investment rather than as a source of expense.

Example of Employer Achieving Equity

The University of Oklahoma Health Sciences Center (OUHSC) is an example of a successful balance struck between external competitiveness and internal equity. The OUHSC used a straightforward market-based approach. Considering the vast amount of jobs it had to deal with, the slot assignment was cumbersome, inconsistent, and imprecise. To improve the matters, the organization sought help from Hay Group, a job evaluation and consultation agency (Hay Group, n.d.). By using a rigorous and comprehensive survey, Hay Group representatives assembled and processed information that provided them with an understanding of the issues permeating the working culture. Simultaneously, several in-depth interviews were conducted with key executives. The obtained data were used to create a pay grade policy. Now, instead of fitting the jobs which do not match the listed categories using a best guess approach, one of the sixteen pay grades is applied and adjusted as necessary. This not only streamlines the process but also greatly improves the consistency of internal equity: the compensation decisions are made based on the set of rules rather than intuitive matching.

Example of Employer Not Achieving Equity

The companies are understandably reluctant to publish information on the failure of establishing internal equity. Nevertheless, it is sometimes reported by dissatisfied employees. For example, a former Google employee claims to detect huge discrepancies in payment among the staff. The self-administered survey allegedly revealed inequitable compensation practices (Brown, 2015). While it is hard to observe any meaningful results, the fact of the employee-driven survey signifies distrust to the employer, which may lead to loss of motivation and, eventually, a search for a fairer working environment.

References

Armstrong, M. (2012). Armstrongs handbook of reward management practice: Improving performance through reward. London, England: Kogan Page.

Armstrong, M., Brown, D., & Reilly, P. (2011). Increasing the effectiveness of reward management: An evidence-based approach. Employee Relations, 33(2), 106-120.

Brown, K. V. (2015). Ex-Googler says she exposed company-wide pay inequality with crowdsourced spreadsheet. Web.

Dow, S., Morajda, D., & McMullen, T. D. (2006). Evaluating pay program effectiveness. WorldatWork Journal, 15(2), 50-59.

Hay Group. (n.d.). University of Oklahoma Health Sciences Center: Balancing internal equity and external competitiveness in pay practices. Web.

Pedulla, D. S. (2013). The hidden costs of contingency: Employers use of contingent workers and standard employees outcomes. Social Forces, 92(2), 691-722.

Grading Rubric

HRM511 Module 4 Case Study Checklist (Rev. 4-6-16)

Instructions for student: After you complete your references section in your assignment, copy and paste this grading rubric to your Word document and use it as a checklist to help make sure you covered all the required content, structure, and mechanical expectations.

When is equity achieved? According to the Portland Plan Progress Report, it is “when identity such as race, ethnicity, gender, disability, or sexual orientation has no detrimental effect on the distribution of resources, opportunities, and outcomes for group.” (Sustainability, 2017). Regions with greater inclusion and smaller racial income gaps attain more economic growth, yet most communities of color in the Portland metropolitan region experience the worst economic and social disparities (Metro, 2016b). Portland’s racial equity journey started with the Portland Plan 2012 which was initiated in 2009 and published three years later (Anne Green et al., 2017). Later came the Comprehensive Plan 2035 which incorporated the Portland Plan and then the Climate Action Plan. All three were released by the Portland Bureau of Planning and Sustainability (BPS), and to parallel these documents, Metro published the ‘Strategic Plan to Advance Racial Equity and Inclusion’ which set five main goals to achieve racial equity. All of PBS’ plans have racial equity goals and released a progress report in 2017 entailing which goals were on the path to being met and which ones were at a standstill. Correspondingly, each bureau in the City of Portland has a five-year racial equity plan with specific steps to achieve their goals.

The Portland Plan 2012 included a ten-page section solely about racial equity and set a list of goals to “close the gaps” regarding racial inequity. The objective was to collect data to better understand the challenges faced by communities of color, then apply it to assess equity impact on policies, investments, and public services in order to tailor approaches to reduce racial disparities (Portland, 2012). These same goals are applied in the plan’s Five-Year Action Plan in addition to enforcing the City of Portland Civil Rights Title VI Program Plan, which calls for the removal of “barriers and conditions that prevent minority and low-income groups and persons from receiving access, participation, and benefits from city programs, services, and activities.” (Portland, 2012). Another aim is to build the skills and expertise to address institutional racism and general racial inequity (Portland, 2012) which both Metro and BPS have been diligently working on.

Policy 3.1 in the Comprehensive Plan, uses an urban design framework as a guide to create inclusive places; like so, Action 18 of the twenty equity actions in the Portland Plan, uses an equity roadmap that was designed to identify and eliminate discrimination while promoting equitable outcomes (Sustainability, 2017). Goal C of the Strategic Plan strives to promote equity lens training. Equity would be perceived as a top priority by employees and provide mandatory racial equity training for all staff (Metro, 2016b). Metro created the Committee on Racial Equity (CORE), to advise Metro staff on implementing the Strategic Plan successfully (Metro, 2020). Additionally, Portland’s Bureau of Transportation (PBOT) initiated the Racial Equity Committee, who is in charge of ensuring the bureau is following and implementing an equity lens flawlessly (Portland, 2020c). Chris Smith relayed during the interview that the Planning Commission had equity training but is shifting towards an anti-racist lens that would be a more intense lens. He added that it is a learning process because it is difficult to dismantle the institutional racism in place even with new policies written using an equity lens.

Both the Strategic Plan and the Comprehensive plan aim to implement policies, procedures, and infrastructure decisions that advances racial equity and allocates equitable resources and investments to communities of color (Metro, 2016b, Portland, 2020a) and make decisions based on awareness of how past decisions have affected equity (Portland, 2020a). In contrast, the Portland African-American Leadership Forum (PAALF) felt that setting equity goals is not enough to end the racial problems (Forum, 2017). The organization published The People’s Plan to show what the inclusion of Black people looks like and how it should be done. Local municipalities promised to implement racial equity in their work but they have fallen short in achieving meaningful change for the Black community (Forum, 2017). As seen in the progress report, equity inclusion had not changed since the Portland Plan was released. Out of the twenty equity actions initiated by the city, five percent have not been started and the rest are in progress, meaning that even though some are underway, none have actually been sought through (Sustainability, 2017). Furthermore, survey respondents expressed that the city keeps talking equity, but no real efforts have been made to implement it. Forty-two percent of respondents agreed that current planning policies aid in further marginalization of POC residents and some felt that the city still favors the White population.

Community Engagement

Community engagement played a significant role in shaping equity goals by using feedback from non-profit organizations, businesses, and residents. The Portland Plan held dozens of workshops, hundreds of meetings with community groups, and received 20,000 comments from residents, local businesses, and non-profit organizations before releasing the plan in 2012 (Portland, 2012). Similarly, Portland 2030 was created by asking 17,000 people what they wanted for PDX’s future. A number of values were set which included: community connectedness and distinctiveness, equity and accessibility, sustainability, safety, accountability and leadership, inclusion and diversity (VisionPDX, 2008). Portland moved towards a bottom-up approach where community organizations have more say instead of the city taking the lead (Anne Green et al., 2017). Adding on, the Strategic Plan aims to break down social, historical, and institutional barriers while improving practices to better engage communities of color (Metro, 2016b); likewise, the Comprehensive Plans’ community engagement goals align with the Strategic Plan as seen in the whole of chapter two of the Comprehensive Plan and expands into further detail regarding the representation of vulnerable communities in decision making processes by acknowledging the exclusive historical past to better understand the conditions of the communities the plan is trying to represent and put forth more culturally appropriate processes through consulting with communities of color (Portland, 2020a). Subsequently, the City of Portland won an award in 2015 from the International Association for Public Transportation, for the equity and community focus on their Powell-Division Transit and Development Project (Sustainability, 2017). Furthermore, Policy 2.27 in the Comprehensive Plan aims to identify the demographics of possible affected communities when starting a planning project (Portland, 2020a). The city followed through with this promise by commissioning a study called, “Walking While Black” in which communities of color were interviewed to procure a visceral picture of what it is like to be a pedestrian with dark skin. This study was done out of the PBOT and used to redo their pedestrian masterplan (Chirinos, 2020a) as well as engage the POC community into the city’s plans. Moreover, Metro recently had a steering committee of about thirty people, including representatives from the Urban League of Portland and Coalition of Communities of Color, who helped develop the project list for allocating investment to communities that were traditionally under-served who mainly consisted of POC and low-income populations (Chirinos, 2020a).

Aside from wanting to engage more diverse groups, Portland’s planning departments also wanted to facilitate accessibility to the meetings for communities of color. Metro’s goals A and B from their Strategic Plan proposed different methods as to how they will meet their vision. “Goal A: Metro convenes and supports regional partners to advance racial equity” (Metro, 2016a) consists of gathering public, private, and community partners from the Portland region and to collaborate on how to advance racial equity and address a number of issues such as improving access to government services and decision making processes (Metro, 2016a). Goal B’s mission is to engage communities of color meaningfully by breaking down institutional barriers, reducing obstacles that obstruct POC from attending meetings, and continue to polish culturally informed practices (Metro, 2016a). Policy 2.34 of the Comprehensive Plan and Goal B in the Strategic Plan both state that accessibility to meetings will be improved in terms of time, location, language, and childcare services (Portland, 2020a, Metro, 2016a). However, Anahi Segovia Rodriguez expressed during her interview that the system was set up against those who could not afford to skip work for a public meeting, in other words, they needed to work to survive. She continued to express that the commute can be lengthy for some, parking is hard to find and it has to be paid for which put low-income POC at a disadvantage, and even if the meetings could be accessed online, there were no alternative language options. Overall, Rodriguez felt that community leaders intended to listen to these groups of people, but their real intention was to gather their support and push their political agenda.

Environmental Justice and Accessibility

Parks and greenspace are very important to Portlanders, but so is accessibility to services and amenities, mainly if they can be reached by bicycle or walking which is explicitly mentioned in Portland 2030. By the year 2030, the people would like to see Portland have public transportation that better connects neighborhoods to each other and the city center, goods and services are easily accessible in every neighborhood, and everyone has equitable access to community gardens, parks, and greenspace (VisionPDX, 2008). The public’s demands seemed to have been taken into consideration since both the Comprehensive Plan and the Climate Action Plan set aims and objectives to fulfill said needs. The Comprehensive Plan’s Policy 8.22 states that public facilities will be provided to alleviate service deficiencies in places facing these disparities (Portland, 2020a). The Climate Action Plan sets several goals to achieve environmental justice and recognizes that these goals cannot be achieved without addressing existing disparities and advancing equitable outcomes (Portland and County, 2015). Ongoing institutional racial bias and historical discriminatory practices consequently led to the inequitable distribution of resources and access to opportunities for communities of color (Portland and County, 2015).

Communities of color have been pushed out from Northeast neighborhoods like Alberta and Cully into the outer eastern part of Portland due to high housing prices and discrimination. Thirty-eight percent of East Portland residents are POC and twenty-five percent of the city’s population resides in this area, yet they lack frequent transit service and indicators of a complete neighborhood (i.e. bike lanes and sidewalks) due to poor investments (Portland and County, 2015). Equitable access to public transportation and greenspace is essential to the resilience of these communities (Forum, 2017). If these factors were improved, carbon emissions would be reduced. Communities of color already face higher respiratory and mental health problems due to their neighborhoods being closer to freeways, brownfields, and other hazardous areas (Forum, 2017), but the air quality, noise pollution, and temperature would be reduced if more greenspace was added (Portland and County, 2015). Households of color are disproportionately more likely to be in a “heat island” as found in a study conducted by Portland State University in 2019. Heat islands are areas that are significantly hotter than others because they consist of more concrete and asphalt than greenery which would help keep the place cool (Williams, 2020). The study found that in Portland, the cooler areas were a result of intentional investment in parks, trees, and transportation and housing policies that yielded “cooler services” which coincided with wealthier and White residents, yet the neighborhoods that experienced higher temperatures were historically subject to discriminatory housing policies (Williams, 2020). Some heat islands in Portland are the inner SE industrial area, inner NE along the I-5 Corridor, and the 82nd Avenue Corridor between I-84 and Foster Road (Williams, 2020). This systemic pattern suggests than Portland’s planning system has been negligent of the affected communities and prioritizing richer and whiter communities. Fortunately, city councilors adopted changes to the city code in 2019 where new development to allocate greenery and parking lot size limitations are required. Communities groups have been active in planting more trees and expanding greenspace by using the heat map [figure x] to target areas needing these amenities (Williams, 2020). Hopefully, the city can implement more green buildings and ecological sound developments in Black neighborhoods as well, as it is something Black Portlanders would like to see more of (Forum, 2017). According to PAALF, a sustainable city is both ecologically, socially healthy and places greater emphasis on environmental justice (Forum, 2017). However, the Climate Change Act warns that investments that help relieve these environmental burdens attract new residents to these communities which would increase gentrification and displacement (Portland and County, 2015), therefore, planning departments must include anti-displacements plans to ensure that these new investments do not create further displacement (Forum, 2017).

Many have classified our current geological epoch as the Anthropocene, an era in which humans now act as the primary creators of geological change (Allen et al., 2018). This concept is captured in human-induced climate change; since the invention of agriculture and rapidly following the industrial revolution, we have altered our planet, and the consequences are presenting themselves more clearly now than ever. Therefore, the greatest humanitarian and existential threat to our societies has brought about ethical issues when it comes to mitigating and adapting to environmental hazards. As such, climate change asks us how we should distribute the costs of mitigating these threats and asks how we might allocate costs from responding to the negative consequences that arise. Using Henry Shue’s chapter on global environment and international equity, I will explore how his three principles of equity provide a framework for understanding who should pay the costs of mitigating climate change. I begin with a discussion on why the inequality of development is unfair in the first place and therefore ought to be reduced. Next, I discuss the greater contribution, greater ability to pay, and guaranteed minimum principles. I conclude by revisiting the premise that wealthy and developed nations should bear most of the costs associated with climate change, for they have contributed the most to this global threat to our existence.

Equity, Fairness, and Development

Issues of equity or fairness only come to fruition if there is something in question that must be divided among different groups (Shue 2014, p. 185). In this case, the issue of environmental benefits and burdens and the costs associated with dealing with them in the face of climate change are contested, and a distributive justice framework can be utilized in order to understand why wealthy nations should adopt the costs of climate change mitigation.

The destruction of the ozone layer and initiation of global warming from industrialization are two effects of climate change we are currently seeing (Shue 2014, p. 183). The processes of industrialization have mainly fueled this environmental damage; further, these development processes have benefitted the Global North, while robbing the Global South of their natural resources and economic development. This was achieved through luring developing nations into unilateral trade agreements with the Global North for their environmental goods under a neoliberal guise of ‘development as necessary’ for progress.

Yet, both those who have benefitted from these trade agreements and those who have not are feeling the stresses of climate change today. According to the greater contribution to the problem principle, which takes a life-cycle view of environmental damage and would require rich nations to internalize their past costs of pollution, the Global North should bear unequal burdens in order to right the inequalities they have directly created. Differing from the polluter pays concept, in which polluting countries must account or internalize their costs for future pollution, Shue’s first equity principle aligns with commonsense fairness, and would require those to be held responsible for the majority of emissions contributing to industrialization and current climate change-inducing atmospheric CO2 levels.

Moreover, poor countries have had to pay for the benefits received from developed countries (Shue 2014, p. 184). Whether this came in the form of international aid or the spread of new technology, Shue provides that the ever-growing mountain of debt accrued by poor countries is attributable to the perceived benefits they were promised by developed countries (ibid). As stated earlier, environmental destruction is borne by all. Rich nations have enjoyed a surplus of benefits to burdens from the processes of development and have not incurred most of the environmental damage in their home countries, partly because extraction of resources and manufacturing is oft outsourced to the Global South and/or developing nations. Therefore, rich nations should carry the burdens of dealing with climate change in the future due to the damage they have done in the past and continue to do in the present.

Greater Contribution to the Problem

It is commonly understood that it is not fair to punish someone for a consequence that could not be avoided (Shue 2014, p. 185). However, it is acceptable to hold one responsible for consequences or effects that were unforeseeable. This follows a similar line of thinking to conceptualizing intent versus impact; although developed countries may not have intended to wreck the global climate, they certainly have had the largest share in impacting and contributing to increases in CO2 levels for a longer time which affect the entire planet today. Thus, these countries should be help responsible for the damages they have created, regardless of their intent or their ability to predict the effects of their actions.

This issue of responsibility is closely linked to a common objection made by those who claim they shouldn’t be held responsible (or punished) for damage they didn’t commit themselves. This is an acceptable objection, yet in the case of contributions to climate change, it is rendered irrelevant. A few rich generations of industrial societies are undoubtedly still related and close enough to current generations, having contributed to our current economic and political structures. As Shue poignantly writes, “benefits and costs, and rights and responsibilities, carry across generations” (Shue 2014, p. 186). Here we see evidence of the principle of intergenerational equity in Shue’s argument, a concept that has been adopted and supported by many environmental NGOs and international agreements, such as in the Sustainable Development Goals, approved by the UN in 2015 (UN Sustainable Development Agenda, 2019).

Moreover, I hold the view that we, people living in developed countries, are all implicit as members of an industrialized state in contributing to increasing greenhouse gas emissions. Additionally, only a few generations earlier, our ancestors were the direct beneficiaries of industrial development (in the case of Australia and the United States, for instance). As such, I argue that current and future generations will likely continue to benefit from previous industrial activities and should therefore be held responsible for the costs associated with a changing climate.

Greater Ability to Pay Principle

Shue’s second equity principle, greater ability to pay, is inherently a requirement of fairness and supports the concept that the fewer resources one has, the greater the sacrifice they would make in contributing to the solution. The principle states that: “Among a number of parties, all of whom are bound to contribute to some common endeavor, the parties who have the most resources normally should contribute the most to the endeavor” (Shue 2014, p. 186). The component of generality in this principle, i.e. “normally,” addresses the issue of incentives and fairness, in that these contribution could discourage (well-off) people from earning more, taking more risks, or working harder—for the result would be greater contribution at a larger percentage, while others would not have to contribute as much (Shue 2014, p. 188).

Additionally, this principle incorporates the notion that in the present state, countries with greater assets should contribute at a greater rate to the mitigation of environmental damages (Shue 2014, pp. 186-187). Here, it is important to differentiate the greater ability to pay principle to an egalitarian, equal contribution principle. Shue’s principle takes an intergenerational equity perspective and acknowledges that the current state of development and distribution of environmental benefits and burdens is not equal or fair; therefore, why should the mitigation or reconciliation for the future be so? We should not merely wipe out centuries of unjust behavior on behalf of the developed countries and demand equal contribution for the future, for this pays no attention to the circumstances of the countries that would contribute and the intended final outcome, that is: avoidance of climate catastrophe through mitigation in the present (Shue 2014, p. 187).

Guaranteed Minimum

Shue’s third principe of equity concerns the concept of the unfair nature of failing to guarantee all people an adequate minimum, if Earth’s resources can support it and all other aspects of a decent human life could be preserved for all parties (Shue 2014, p. 191). Moreover, it would rule out costs associated with climate change that would leave developing countries unable to ensure a minimum quality of life for their people. The concept of radical inequality, suggested by philosopher Thomas Nagel, underlies this principle and states that our societies are “radically” unequal partly because the total amount of resources available is more than enough for everyone living very well-off to slightly reduce their quality of life, while also uplifting those who are the worst-off to some acceptable minimum level; yet, this redistribution of goods has not yet occurred to aid those most in need (Shue 2014, p. 190). Even if the guaranteed minimum was met, this might preserve the inequalities currently in place, and with global initiatives such as the aforementioned UN Sustainable Development Goals’ number one priorities of reducing hunger and poverty (UN Sustainable Development Agenda, 2019), I would argue that we need to do much more than meet a guaranteed minimum quality of life for those struggling most.

Furthermore, the guaranteed minimum principle is seen in the issue of developed states asking developing states for assistance in dealing with climate change, yet rich states have largely failed to assist poor states (apart from some economic aid with large strings attached in the form of development loads and interest tax) in attaining some decent quality of living, which is certainly unfair (Shue 2014, pp. 191-193). As such, the citizens of poor nations should not have any obligation to developed states to mitigate environmental damages caused by the developed states own industrialization. Ultimately, if the developed states don’t see an obligation to uplift those in poverty, then those in poverty have no obligation to developed states to help in mitigating climate change, when there are more pressing issues, such as feeding themselves and their children (Shue 2014, p. 193).

Conclusion

In conclusion, the three principles of equity discussed here, fundamental fairness and acceptable inequality, the greater ability to pay, and a guaranteed minimum, demonstrate that the actions that are necessary in order to mitigate global environmental issues and the costs associated with these actions must initially be borne by the developed and wealthier, industrialized states (Shue 2014, p. 194).

The state of sport in Australia has progressed much faster than many countries around the world. Gender equity is well on its way to being a major factor that influences Australian sport. The current situation with gender equity is that most women’s sport teams are not getting the recognition and/or support they need. To be able to be as successful as male sport teams, the women’s team need equal pay, funding, resources and airtime (includes advertisments and tv shows) Over the course of this essay, fair opportunities and fair reward are two ways in which Australia can reach equity in sport.

For gender equity to be reached in professional sport, it is importnat that all athletes, male or female, are provided fair opportunities. This means sport should provide everyone with equal euiptment, sport grounds, pay and fundings. This helps increase the amount of people willing to play a sport, esppecially young girls who, right now, do not have the opportunities they deserve. For example, Football Queensalnd released a page on their webiste about pathways for girls in soccer. They stated that “For the most talented players, it is also pathway to national team selection in the Westfield Junior Matildas or the Westfield Matildas.” (Football Queensland, 2019). Futhermore, Queensand Cricket also released a page on their webiste, stating “Queensland Cricket’s pathway program is designed to provide the State’s cricketers with a clear path from the grass roots to the elite level … achieve sustained excellence.” (Qldcricket.com.au, 2019) Gender equity in terms of fair opportunities, for the athlete’s, would be significantly improved if all sports followed in the Matildas soccer teams steps.

Fair reward in proffesional sport is important to provide equity to all players. This means all sports should provide both mens and womans teams with equal and fair rewards, such as equal prize money, trophes and media coverage. For example, As of 2019, the Matildas soccor team is now receiving equal pay to the socceroos. The pay gap that once exsisted now is gone due to the “FFA’s landmark Collective Bargaining Agreement that closes the pay gap” (ABC News, 2019). However, the gender pay gap still exists in Australian sport. Checkmyfile released statistics about gender gap and stated that “According to the Austrlain Bureau of Statistcs, men earn 17% more than woman on average” and “Forty years ago, the women’s prize pool was 73% of the men’s (1976) … Today, both prize pools are the same (2016).” (Checkmyfile.com.au, n.d.). This pay difference between mens and womens sports should not be seen in proffesional sport. A study conducted by the BBC showed that “83 per cent of sports now pay men and women the same amount in prize money” (The Telegraph, n.d.). Without fair rewards, women athletes are less likely to want to play and partcipate in sports. This also provides women athletes something can aim for and something they will want to work hard for. These two articals have shown that fair rewards is acheviable in professional sport.

In November 2017, Melbourne Univerity sport released a discussion paper with details of how they are striving to create gender equity in their sports. The paper includes different sections such as media participation opportunities, club activites and representative sport and scholarships, however the introduction is the most noatble. In section 1.1 they state “The project was initiated in response to a query raised … about the availability of particular opportunities to both male and female students.” (Sport.unimelb.edu.au, 2017). Eventhough this is only university sports, notes can be taken into professional sport about how equity in sport can be reached for both men and woman players/athletes.

Equity in sport is important as it provides both woman and men equal chances and opportunities in their sport. Women’s teams suffers most as they have less recognition, funding and pay than their male counterparts. Two ways in which gender equity in sport can be improved is by having fair opportunities and fair rewards. Ash Bartey, female tennis player, suffers with discrimination, not only from her Aborigional Heritage, but her gender. Herself and other female tennis players play in the shadows of men, however, that doesn’t effect her succses in tennis, after being announced number 1 ffemale tennis player. Gender equity will soon be a major factor that influences Australian sport if the right opportunities, funding and support is given to every team, no matter the gender.

A home fairness advance is an advance in which the lender use of his land as a security. If the investor is unable to repay the advance then his land can be captivated therefore he is liable to return back the amount. The lands possess of low-interest rates. The home equity loans Ottawa determines the value of the home along with the balance that needs to be availed. This scheme operates in a way where if the home costs 2 grand then 1.5 grand to the advance. Generally, the customers avail 20% equity to borrow land with fairness praise sum.

Today people are interested in availing this fee sum as it is similar to any other advance. It gives the clients a sum to use for home renovation, investment. The awareness rate is also fixed to be offered to customers.

Advantage of availing advance

Home equity loan Ottawa is availed s it is easily qualified. The creditor usually approves debtor requests if they possess fairness. The debtor is required to use the home as security. The debtors usually qualify for the advance if they possess a good praise score. If the customers do not possess refuge then it is essential to possess good praise.

Not only are home parity advances easy to be in the running for, but they also tend to come with low-awareness rates. As such, they’re an affordable way to pirate. Credit cards and personal advances, on the other hand, tend to charge higher concern rates.

The Home equity loans Ottawa is availed as

• It is flexible
• Is easily qualified by customers
• Possess low-attention rates
• Not limited to home development and maintenances.
• They may pay for home improvements and college advances.
• The advance may be availed for equity, however, the interest rate may be deducted from toll when availing the scheme.

Drawbacks of a home parity advance

There are various risks involved in taking equity plans, for instance, if the client is unable to make returns then there is a risk of losing one’s home. If the client needs to sell off their land, they are allowed to do so according to policies, however, the price of sale must be high enough to pay off the balance. The equity credit may be converted to other advance options that are more favorable. The loans may also involve

• Risky consequences involving getting to lose home
• May require to sell land to repay the high sum availed
• The borrower may be restricted to rent out his land while loan refund

Substitute for taking Home equity advance

An alternative to equity fee is the Heloc that enables us to give cash in a draw period. The clients are not committed to deriving however they do not have to pay notice on it. Refinancing is also an option opted by various customers which enables them to return the sum with the low concern. The individual can use the money as he may please.

In Conclusion

It is dependent on the person to avail of a specific kind of option for fee. There are various cash-out choices available to give to debtors and prospects for funding. If you are seeking suitable advance experts .you may reach out to Matrix mg. They are leading experts skilled in providing suitable acclaim and backing contracts. The debtors with a secure job can participate in a reasonable amount against their home. In most cases home fairness fee is the most feasible choice to get cash, however, one is recommended to evaluate his choices prior to making a choice when availing a fee.

Equity refers to right doing, good faith, honest and ethical dealings in transactions or relationships between individuals. The ordinary conception of equity is,therefore, based on morality and is linked to what is normally exhorted in churches, mosques and other religious establishments. It is also captured by objective XI of the National Objective and Directive Principles of State Policy contained in the Constitution of Uganda 1995 which enjoins Government to take steps to realise balance development of the diverse areas of Uganda and to pursue affirmative action in relation to the least developed.

From the time of early Greek Philosophers, there is the idea of equity in the general juristic sense as a supplement to law. The Greek conception of law was later relied upon by Roman jurists to develop and widen Roman Law when the Roman Legal System appeared to be signating. It is notable that Roman Law was not split up like English law into rules of common law and rules of equity. Roman Law was an integral part of Roman Legal Systems.

While Roman Law contributed little to the development of English Equity, it had influence on the early development of English Law and Equity. For instance the Praetor, who administered equity was similar to the Lord Chancellor and his equitable jurisdiction. Thus the praetor’s Edict which merged equity with the general law is similar and comparable to the manner in which common law and equity emerged to constitute the dual English System.

Equity came into existence during the 13th century[1]. At that time the courts of law had froze the typesof claims they would hear as well as the procedure governing the hearing of those claims. The range of claims that would be heard became narrow and the processes to bring the actions to court became so technical with jurors often being bribed. As a result of these changes plaintiffs with meritorious claims were often denied relief[2].

To attempt to counteract this discrepancy remedies could be obtained by petitioning the King, who had residual judicial power to deal with such matters. The King began delegating the function of dealing with such petitions to the Chancellor. The post of Chancellor at this time was usually a clergyman and King’s confessor. The Chancery evolved into a judicial body known as the Court of Chancery, until by the end of the 15th century the judicial power of the Chancery was fully recognised. The Court of Chancery was in effect developed as a court of conscience to counteract the defects that existed in the common law system. The rules of equity varied from Chancellor to Chancellor until the end of the 16th century[3].

As equity developed it began to conflict with common law. Litigants used equity to their advantage often seeking an equitable injunction prohibiting the enforcement of a common law order. If a common law judgment was enforced in disobedience of a common injunction then the person enforcing the judgment could face imprisonment[4]. In the Earl of Oxford’s Case (1615)[5] the Court of Chancery issued a common injunction prohibiting the enforcement of a common law order. The matter was referred to the Attorney General Sir Francis Bacon when no resolution could be reached between the 2 courts. Sir Francis upheld the common injunction and stated that ‘in the event of any conflict between the common law and the law of equity, equity would prevail’. Lord Ellesmere pointed out in the above case why there was a need for a Chancery. He stated ‘Men’s actions are so diverse and infinite that it is impossible to make any general law which may aptly meet with every particular and not fail in some circumstances. The office of the Chancellor is to correct men’s consciences for frauds, breaches of trust, wrongs and oppression of what nature so ever they be, and to soften and mollify the extremity of law.’

By the 17th century only lawyers were appointed to the office of Chancellor. From 1529 onwards when Sir Thomas Moore was appointed as Chancellor records of proceedings in Courts of Chancery were kept which led to the development of equitable doctrines. Prior to his appointment no such records were kept and decisions made by the Chancellors were discretionary and erratic. By the beginning of the 19th century the Court of Chancery had become a court of equity. In the case of Gee v Pritchard[6] Lord Eldon made the comment that, the doctrines of the Court of Chancery ought to be well settled, and made as uniform, almost, as those of the common law, laying down fixed principles, but taking care that they are to be applied according to the circumstances of each case. I cannot agree that the doctrines of this court are to be changed by every succeeding judge. Nothing would inflict on me greater pain in quitting this place than the recollection that I had done anything to justify the reproach that the equity of this court varies like the Chancellor’s foot.

The primacy of equity as stated by Sir Francis was later enshrined in the Judicature Act 1873 s25 which also joined the courts of equity and the courts of common law into one under the title of the Supreme Court. The Supreme Court was divided into 2 forming the High Court and the court of Appeal. The High Court was further divided under 5 different headings giving rise to the Chancery Division, King’s Bench Division, Common Pleas Division, Exchequer Division and the Probate, Divorce and Admiralty Division. The central feature of these reforms was that every court would now possess the power and have the duty to decide cases in line with common law and equity[7]. Where there is a discrepancy between the common law solution and an equitable one the precedent of the Earl of Oxford’s case still applies meaning that equity will be paramount in the decision making process. The Supreme Court Act 1981 s49 has embodied this principle and instructed that (1) Every court exercising jurisdiction in England and Wales in any civil cause or mater shall continue to administer law and equity on the basis that wherever there is any conflict or variance between the rules of equity and the rules of common law with reference to the same matter, the rules of equity shall prevail[8].Before the common law courts and the Court of Chancery became one common law actions could only be commenced by means of a writ whereas actions in the Court of Chancery were commenced by an informal bill of complaint and the process begun by the use of a subpoena[9].

Chancery hearings were informal and were not restricted to being able to sit at certain times as was the case with the Common Law Courts. Hearings could even take place within the Chancellor’s house. It would appear that common law and equity were effectively fused together by the Judicature Acts. Ashburner’s view of this was The two streams of jurisprudence though they run in the same channel, run side by side, and do not mingle their waters[10].

Although equity and common law are fused together in that a court is entitled to award equitable remedies or common law remedies or a combination of both within the same court[11] there are still some areas of law where the distinction between legal ownership and equitable ownership still thrive[12]. One such area is in the formation and management of trusts.Before the introduction of equity into the legal system persons wishing to dispose of their property by way of a trust where faced with the difficulty or passing ownership to their intended beneficiaries without giving them the property outright. Under the common law system the transfer of the property into the hands of the trustees’ could only be read as giving full title to the trustees and no account could be given for the concerns of the beneficiaries. The whole process of the trust system is firmly rooted in equity with the trustees holding the land on trust for the beneficiaries.

In order that the trustees can invest or deal with any of the property the ownership of the property transfers to them under common law rulings and equity creates a beneficial interest for the beneficiaries to ensure that when the beneficiaries reach the age of maturity as dictated by the trust document that the full title of the property becomes vested in them. The essential element that the trustees have to be aware of is that despite the fact that they have the power to invest or sell trust property that they are in fact acting on behalf of the beneficiaries. Trustees who make unwise investments are breach the trust can and often are made to compensate the beneficiaries for any losses incurred by their actions. In these matters equity will usually favour the beneficiaries.

Although there is an apparent fusion of common law and equity there is still a difference in the way in which common law remedies and equitable ones are administered. Common law remedies are available as of right whilst equitable remedies are discretionary and awarded at the will of the court. Equitable remedies can also be affected by the behaviour and position of the party claiming the remedy. As the courts are allowed to take into account the conduct of the party seeking the award they can decide not to award an equitable remedy where it considers their conduct should deprive them of such an award.

Problems arose in the case of Tinsley v Milligan [1993 ] AII ER 65 where the question raise was whether the plaintiff could assert a claim to an equitable interest in land by way of a resulting trust where she had acted illegally. The maxim as set down by equity that a person seeking to assert an equitable entitlement must come with clean hands prevented the plaintiff from asserting her right. Under common law a plaintiff would be entitled to assert their common law right to ownership provided that they did not need to rely on their illegal conduct to establish title. As the plaintiff in this case did not need to rely on their illegal conduct to establish title her claim succeeded.To assist the court in making equitable decisions certain maxis of equity have been established. These are not binding rules and do not provide guidance in every situation. They are intended as illustrations based on principles established in recurrent themes.

One of the maxims of equity is that it will not suffer a wrong without a remedy. This is of particular importance in trust law, where without the influence of equity the beneficiaries may lose the benefit assigned to them by way of the trust document. Another maxim was that equity follows the law, although as has been previously stated statute favours equity as prevailing when the 2 are at a variance to each other.Further maxims exist in the following circumstances. Where the equities of the parties are equal one with a legal right and the other an equitable right the common law rules will prevail. Where both only possess equitable rights the first in time right to the item prevails. It was also laid down that he who seeks equity must do equity. This means that the person seeking the equitable relief must act fairly towards the person he is seeking the relief from. As mentioned above anyone coming to equity must come with clean hands. Any illegality or inequitable conduct could effect their entitlement to an equitable remed.

In conclusion, Despite the arguments against equity and the problems caused by the insertion into the Supreme Court Act 1981 that equity should prevail if the two areas of law are in conflict with each other, it is very rare that the judges are placed in such a position, especially since they now have the power to decide issues under either common law rules or equity. From the point of view of plaintiffs the inclusion of equity is a good thing as it gives them a greater likelihood of achieving their desired outcome. The generic juristic of equity lays emphasis on the basic principles of justice and fair play in the administration of the law. This tendency arises from the fact that law at any point in time is not perfect or is defective. While it is conceded that the aim of the law is to maintain justice, this has not been achieved in practice. This explains the development of equity whose objective was to correct any injustice caused by the strict application of the law. Therefore, the fusion debate is relevant.

REFRENCES

1. Pearce, R and Stevens, J, The Law of Trusts and Equitable Obligations, 2nd Ed p4 – 7
2. T. Cockburn, T, Harris, W, & Shirley, M, Equity & Trusts, 2005,Butterworths
3. Cockburn, T & Shirley, M Equity in a Nutshell, 2005, Lawbook Co Co-op Insurance v Argyll Stores [1997] 3 All ER 297 1 Rep Ch 1 at 6
4. (1818) 2 Swan 402 at 414
5. Judicature Act 1873 s24
6. Supreme Court Act 1981 s49(1)
7. Pearce, R and Stevens, J, The Law of Trusts and Equitable Obligations, 2nd Ed p4 – 7
8. Ashburner, W, Principles of Equity, 2nd Ed, 1933, Butterworths
9. Supreme Court Act 1981 s49
10. Holdsworth, W, History of English Law, 7th Ed, 1956, Mathuen & Co Ltd

Money is a little bit different for a billionaire. Compared to an average american, a trip on a yacht is like a subway ride. A sports car is like a toy car. And a private island is like buying a home (Business Insider). Billionaires aren’t the 1%, they’re the .0001%. They can make a call and meet with a world leader. Many of them are world leaders. Billionaires are booming. In 1987, there were an estimated 140 billionaires. In 2019 there are fifteen times as many billionaires, with almost thirty times more wealth, totalling almost 9 trillion dollars. “If today’s billionaires formed a country, it would be the eighth wealthiest country in the world” (BusinessInsider). They have become a symbol of inequality in a rigged system, fueling protests around the world. A lot of billionaires made their fortunes by inventing things that changed our lives. Some more so than others. So why are there more billionaires than ever? And are they good or bad for the world?

In September 1982, Forbes 400 was released, the first billionaire ranking in the world. It is very hard to track down wealth, so they looked to places like Texas where you had the huge oil fortunes, Silicon Valley, where tech was getting a lot of attention. And then in New York City on Wall Street. On that wealth ranking, there were 11 heirs of John D. Rockefeller. He lived in the late 1800s in the United States, an era called the Gilded Age, which saw the world’s first ever self-made billionaires. In today’s dollars, Rockefeller is estimated to be twice as wealthy as the wealthiest person in the world today. This age was characterized not only by the astounding wealth, but massive corruption. Mark Twain coined the term Gilded Age, because while wealth was glittering on the surface, it was rotten underneath. Individuals like Rockefeller got rich from their political connections, consolidating industries into trusts and exploiting workers, and they were barely taxed. Before this time wealth is hard to compare, but to be extremely wealthy you probably controlled an Empire, like Augustus Cesar in Rome. But the Gilded Age tycoons made their money a different way. They founded successful companies. Continental scale economy in the United States and the rise of major corporations caused the massive surge of wealth. Vanderbilts railroads formed more than 200,000 miles of new track that connected the continent for the first time, helping the U.S. turn into an economic superpower.

Billionaires are booming today because of an increasingly global-scale economy, which has helped the whole world get wealthier. “On a global level, inequality has been declining. This is mainly driven by the fact that some of the poor countries are growing fast” (Business Insider). In the last few decades, no country has grown as much as China. Roughly 50 years ago the majority of China was in extreme poverty. As the communist country went through what is called socialist modernization, extreme poverty has virtually diminished. Before 1978 there were no billionaires in China, they now have the second most after the U.S. It is a very similar situation in India, who now have over 100 billionaires (NY Times).

In the white collar world there is something called ‘winner takes all’, which is the case for mobile tech industries, consisting of over half of the mega billionaires (30 billion plus). Digital products like websites or apps that don’t take much manpower to build can instantly reach a global market, making them the most profitable sources of income. Google’s founders for instance, are the 10th and 14th wealthiest people in the world. Facebook’s founder is the eighth wealthiest person in the world. Almost 50% of all U.S. shopping happens on Amazon. In 2019 Amazon’s CEO, Jeff Bezos became the wealthiest person in the world (Guardian).

Celebrity billionaires like Oprah, Kylie Jenner and Michael Jordan are low in the billionaire rankings, and none of them are on the list for the work that first made them famous. Michael Jordan made 90 million dollars playing basketball, but his corporate partnerships made him almost one billion dollars. He became a millionaire through his labor, but became a billionaire through his capital. Capital is anything you own that can make you money. A home, stocks, patents and copyrights are all examples of capital. Most people make their money through labor, but the richer you are the less your income comes from labor and the more it comes from capital. The .0001% are an exceptional example of this. Once you have capital, it just grows. Money Makes money. “To turn 100 dollars to 110 dollars is work, but to turn 100 million to 110 million is inevitable”, Edgar Bronfman Sr. Heir to the Seagrams fortune. That’s because if you only have 100 dollars in savings it’s hard to spend and it’s hard to invest. But 100 million dollars turns to 110 million dollars if you let it sit in the stock market for an average year without lifting a finger. After a couple generations you find yourself with a dynasty.

At least two hundred millionaires have signed the Giving Pledge, vowing to give away at least half of their wealth. And they’re doing things that governments traditionally do like fighting infectious diseases, funding the construction of Olympic facilities, ensuring college is affordable, or repairing critical infrastructure like Elon Musk pledged he would make clean drinking water available to everyone during the Flint Water Crisis. There is controversy surrounding the wealthy’s involvement because, “you do not want our citizens to be at the mercy of private unaccountable individuals who might or might not fix the problems that you have with your infrastructure, governments & basic human rights’, Abigail Disney, Granddaughter of Roy Disney. Governments raise money for these public services through taxes, but in most wealthy countries individuals labor income is taxed higher than their capital income. Yet even if a country increases its taxes on the wealthy, in a globalized world that is hard to enforce. Offshore financial systems give the wealthy the opportunity to avoid income taxes, corporate taxes, inheritance taxes and hide assets from creditors. The world got a glimpse of this system in 2019 when people crunched the numbers when an analysis of Scandinavian countries found out that on average most people avoid paying 5% or less of their taxes. The wealthiest .01% dont pay about 25%. In total the equivalent of 10% of the world GDP was stashed in offshore bank accounts, trillions of dollars. In Russia the .01% stashed more than half of their wealth in offshore accounts. A Lot of missing tax revenue for public services (PBS).

With expert help, billionaires can pick and choose the laws of whatever country they like. “Globalization has opened up all sorts of addresses to hide the money”, Jeffery Sachs, economist. New York City is home to the most billionaires in the world. Apartments worth tens of millions of dollars making New York part of that global ecosystem of hiding wealth from the law, laundering money and doing all sorts of things that push the edges of legality. With an LLC, the owners of these properties are left anonymous, making it virtually impossible for someone to determine who the ultimate owner is (NY Times). This is one reason why it can be so difficult to track down where all the billionaires are, or how many there are, or how many billions they have. Governments don’t track wealth on a global scale, so rankings like forbes are the best source we have, and their not reliable. These lists are based on publicly available information. Most billionaire wealth is private. Billionaires may not even know how much money they have. “Once you buy an asset that isn’t publicly traded, it’s really whatever you want to value it at”, Mark Cuban. Forbes recognizes that it underestimates the amount of wealth in the world.

Back in the Gilded Age, billionaires didn’t just give away their money. The government stepped in. The Progressive Era began a new way of regulation, breaking up the major trusts like standard oil. Teddy Roosevelt was famously called the ‘trust buster’ for this. In a globalized world, reigning for wealth looks a little different. The European Union has put tax havens on a blacklist. But the results remain unseen. And in the U.S. politicians have started pushing for much higher taxes on the wealthy, which a majority of Americans agree with, including some billionaires. “The taxation system has tilted towards the rich and away from the middle class. And I think it should be addressed”, Warren Buffett. Our relationship to billionaires is complicated. We’ve made them celebrities if they weren’t already. We’ve made them powerful, and they do some incredible things with their money. Sometimes more efficiently than governments. “It’s not the individuals i’m worried about, it’s the system which allows this kind of massive income and wealth inequality”, Sen. Bernie Sanders. That nation of billionaires might soon be the richest in the world. And while their money might not live in one country, well all live in theirs.