Geopolitical Risk, Sustainability and “Cross-Border Spillovers” in Emerging Markets, Volume I : Constitutional Law, Economic Psychology and Quasi-Labor Issues

Economic recessions, social networks, environmental damage in several large countries (eg. China, Brazil, U.S.), the Global Financial Crisis of 2007-2015 and cross-border spillovers continue to significantly affect economic systems, financial markets, social structures and environmental compliance worldwide. These have rekindled economists’ and policy-makers’ interest in the relationships among constitutions, risk regulation, foreign aid, political systems, government size, credit expansion and sustainable growth. Risk regulation remains highly ineffective as manifested by the failures of new financial regulations and government stimulus programs that were implemented during 2007-2020 in many developed countries and emerging markets countries. This book, the first of two volumes, addresses these issues in the context of the role of constitutional economics and economic psychology as tools for national and global sustainable growth and risk management. Furthermore, this volume analyzes the often symbiotic relationship between alternative sets of legal-institutional-constitutional rules that constrain the choices and activities of economic and political agents on one hand, and sustainable growth, financial regulation and the risk management of financial institutions on the other; and reviews the effects of constitutions and legal institutions on market dynamics (real estate; fixed-income, stocks; etc.) including volatility, market depth and liquidity. This book will help researchers develop better artificial intelligence and decision-systems models of geopolitical risk, public policy and international capital flows, all of which are increasingly relevant to investment managers, boards-of-directors and government officials. Contents List of Figures List of Tables Chapter 1: Introduction 1.1 Target Countries, Target Audience and the Emphasis on US Laws in This Book 1.2 The Intentional De-Emphasis of Standards-of-Review (Constitutional Law) 1.3 Emergence and Nonlinearity: The Relationship Between Multinational Corporations (MNCs) on the One Hand and Financial/Economic Crisis, Geopolitical Risk and Cross-Border Spillovers 1.4 Economic Psychology and the Global Digital Economy: Interactions with and Implications for Constitutional Law, and a Summary Critique of the Literature on Constitutional Economics 1.5 Behavioral Bias Indicators 1.6 Nwogugu (2012) and Emergence: Constitutional Political Economy, Mechanism Design and Sustainable Growth 1.7 The Stare Decisis Doctrine (and Some of Its Economic Psychology Effects) 1.8 Causal Factors: Global Value Chains, Preferential Free Trade Agreements and “Joint-Committees” 1.9 Causal Factors: Labor and Industrial Relations 1.10 The Replicability/Reproducibility Crisis in Academic Research 1.11 The Chapters Appendix 1: List of Some Reported Accounting Scandals Appendix 2: The List of Top Corporate Scandals in the World That Occurred Without Any Insolvency Appendix 3: List of Major Corporate Collapses Around the World (up to 2019) Appendix 4: List of the Top-100 Most Successful Startups in the World Appendix 5: List of the Worst Startup Failures in the World (up to 2017) Appendix 6: List of All Major Financial/Economic Crisis Since the Seventeenth Century Bibliography Chapter 2: Cross-Border Spillover Modeling, Concepts of “Geopolitical Risk” and “Transition Economies”, and the 2010–2020 Financial Stability Recommendations by the IMF, G20/G30 and the EU 2.1 Emergence and Nonlinearity: New Definitions and Dimensions of Geopolitical Risk 2.2 New Definitions of “Transition Economies” 2.3 Cross-Border Spillovers and the Modeling of Emergence and Nonlinearity: A Critique of the Literature and the Unreliability of Empirical Research in Psychology (Including Mathematical Psychology), Complex Systems, Behavioral Political Economy 2.4 Emergence and Nonlinearity: Health Effects of Spillovers, Integration and Resulting Shocks 2.5 Emergence and Nonlinearity: A Review of the Literature on Social Networks 2.6 Emergence and Nonlinearity: Some Social Capital Dimensions of Geopolitical Risk and Cross-Border Spillovers 2.7 Emergence and Nonlinearity: The Muted Effects of the Rise of Both the Far-Right and Nationalist Movements in the United States, Latin America, Europe and Parts of East/South Asia (as of 2021) 2.8 Some Elements of “Global Risk Infrastructure” and the 2010–2020 Recommendations by the IMF, G20/G30 and BIS 2.9 Some New Theories 2.9.1 The Policy Contagion Theory 2.9.2 The Truncated Integration Theory 2.9.3 The Political Support Theory (or “Bifurcated Political Support Theory”) 2.9.4 The Monetary-Fiscal Gap Theory 2.10 Conclusion Bibliography Chapter 3: Some Constitutional Law, Competition Law and Economic Psychology Issues Inherent in Some Real Estate Market Mechanisms 3.1 Existing Literature 3.2 Geopolitical Risk and Some Economic Psychology and Cross-Border Spillover Effects of MLS, REWs and Rent-Control/Rent-Stabilization Statutes 3.3 Complex Systems, Complexity and the Rule of Law; And MLS and RCRS as Quasi-Labor Regulation 3.4 The Failure of Mechanism Design Theories 3.5 Networks and the Network Effects of MLS, REWs and RCRS 3.6 The Substantial Control Theory 3.7 The Unconstitutionality of the Multiple Listing Service (MLS) 3.7.1 Real Estate Transactions and the Commerce Clause of the US Constitution 3.7.2 MLS: The Right to Privacy Doctrine 3.7.3 The Right to Freedom of Speech 3.7.4 The Right of Association Doctrine 3.7.5 The Right to Contract Doctrine 3.7.6 Advertising as Constitutionally Guaranteed Free Speech 3.7.7 The NAR (United States) Policy Pertaining to Real Estate Brokers: The Interstate Commerce and Commerce Clause 3.8 Unconstitutionality of Professional Licensing Requirements for Real Estate Websites 3.9 The Unconstitutionality of RCRS (Rent-Control and Rent-Stabilization) Laws and the Hukou System in China (and Similar Restrictive Systems in Other Countries) 3.9.1 Balancing-of-Interests Tests and Alternatives and Supplements to RCRS 3.9.2 RCRS as Violations of the Takings Clause of the Constitution 3.9.3 RCRS Violates the Equal Protection Doctrine 3.9.4 RCRS Violates of the Substantive Due Process Doctrine and the Procedural Due Process Doctrine 3.9.5 RCRS Violates the Interstate Commerce Clause of the US Constitution 3.9.6 Labor Dynamics and the Hukou System in China (and Similar Restrictive Systems in Other Countries) 3.10 General Real Estate Transactions and the Commerce Clause of the US Constitution 3.11 (US) State Laws That Prohibit or Restrict Real Estate Brokers from Offering Commission Rebates to Home Buyers/Sellers 3.12 (US) State Laws That Prohibit or Restrict Banks from Participating in Real Estate Brokerage 3.13 Conclusion Appendix A: Summary of RCRS Regimes in Various Countries (Source: Global Property Guide; 2017, http://www.globalpropertyguide.com/faq/inheritance-law-and-taxes; and Associated Contributing Law Firms, http://www.globalpropertyguide.com/contri Bibliography Chapter 4: Constitutionality of Real Estate Taxes and Corporate Location Incentives, and Some Associated Economic Psychology and Complex Systems Effects 4.1 Existing Literature 4.2 Geopolitical Risk and Some Economic Psychology and Cross-Border Spillover Effects of Real Estate Taxes and Corporate Location Incentives 4.3 Corporate Location Incentives and Real Estate Taxes as Quasi-Labor Regulation 4.4 The Court Erred in Tax Equity Now NY LLC vs. City of New York, et al. (New York State Appellate Division; Feb. 2020) by Ruling That New York City’s Property Tax System Is Constitutional 4.4.1 The “Change Criteria” 4.4.2 The Takings Doctrine 4.4.3 The Equal Protection Doctrine 4.4.4 The Due Process Doctrines (Substantive and Procedural Due Process Doctrines) 4.4.5 The Right to Contract Doctrine 4.5 Other Court Rulings and Developments in Real Estate Taxation in Europe and the United States 4.5.1 The German Constitutional Court Properly Declared in 2018 That the German Real Estate Tax Regime Was Unconstitutional 4.5.2 The Spanish Supreme Court Properly Invalidated the Municipal Real Estate Tax on Empty Housing Units in 2020 4.5.3 The Spanish Constitutional Court Properly Invalidated Parts of the Urban Land Value Increase Tax (“ULVIT” or “plusvalía municipal”) in 2017 4.5.4 The Delaware Court of Chancery Properly Ruled in 2020 That Delaware State’s Property Tax System Was Unconstitutional 4.5.5 Inheritance Taxes and Transfer Taxes That Function as Non-recurring Real Estate Taxes 4.6 Real Property Taxation as a Violation of the Procedural Due Process Doctrine and the Substantive Due Process Doctrine 4.7 The Existing Regime (as of 2020) of Real Property Taxation by Many US Municipalities Constitutes Violations of the Equal Protection Doctrine 4.8 Real Property Taxation and Tax-Based Location Incentives Constitute Violation of The Interstate Commerce Clause of the US Constitution and the Dormant Commerce Clause Doctrine 4.9 Grants of Corporate Location Incentives by States and Municipalities Constitute Violations of the Equal Protection Doctrine 4.10 Traditional Common-Law Real Property Taxation Constitutes a Violation of the “Right to Contract” Doctrine 4.11 Grant of Local Incentives Constitutes a Violation of the “Right to Contract” Doctrine 4.12 Making Real Property Tax Liens Superior to Prior Mortgages and Loans Regardless of Timing of Non-payment (Super-Priority Status) Constitutes a Violation of the Substantive Due Process Doctrine and the Interstate Commerce Clause (United State 4.13 Real Property Taxation Constitutes Violations of the Takings Doctrine 4.14 Grant of Local Incentives May Constitute Violations of the Takings Doctrine 4.15 Conclusion Bibliography Chapter 5: Optimal Voting and Voting-Districts; and Relationships between Constitutions and the Size of Government 5.1 Existing Literature 5.2 Emergence and Nonlinear Effects: Geopolitical Risk, Some Economic Psychology Factors and Cross-Border Spillover Effects of Electoral Systems (Spillovers into Emerging Markets) 5.3 Complexity, Complex Systems and the Rule of Law 5.4 Emergence and Nonlinearity: Constitutions, Labor Regulation and Government-Size 5.4.1 Some Geopolitical Risk Implications of Government-Size 5.4.2 Labor Regulation, Government-Size and the Constitutionality of Executive Orders 5.5 Emergence and Nonlinearity: Optimal Electoral/Voting Systems 5.5.1 Some Geopolitical Risk Implications of Electoral/Voting Systems 5.5.2 Electoral/Voting Systems, Labor Dynamics and Labor Regulation 5.5.3 Recommended Voting Systems for Popular Public Political Elections 5.5.4 An In-Legislature Voting System (for Elected Politicians) That Can Reduce or Eliminate the Effects of Vote Suppression/Low Voter Turnout, Incumbency Biases and Partisan Gerrymandering 5.6 Federalism and Optimal Political Geoboundaries 5.6.1 The Irrelevance of “Redistricting Algorithms”: Redistricting and “Gerrymandering” in the United States and the US Supreme Court’s Decision in Rucho vs. Common Cause (2019) 5.6.2 Standard Tests That Legislatures Can Enact and That Courts Can Use to Determine Whether Partisan Gerrymandering Has Occurred and Is Unconstitutional 5.6.3 Some Properties of Optimal Geography-Based Revenue Allocation in Countries That Have Heterogeneous Populations: The Nigerian Case 5.6.4 A Simple Dynamic Socioeconomic Model of the Optimal Allocation of Non-cooperating Communities to a State in a Country That Has a Heterogeneous Population 5.7 Conclusion Bibliography Chapter 6: Constitutional Political Economy Dimensions of Sovereign Debt Policy, Foreign Aid and the Politicization of Pension Funds and Sovereign Wealth Funds 6.1 Existing Literature 6.2 Complexity, Complex Systems and the Rule of Law 6.3 Geopolitical Risk and Some Cross-Border Spillover Effects of Foreign Aid, Sovereign Defaults and Politicization of Pension Funds and Sovereign Wealth Funds (Spillover from Developed Countries into Emerging Market Countries): Foreign Aid, FDI an 6.4 Emergence and Nonlinearity: Some Geopolitical and Labor Market Influences on Public and Private Pension Funds 6.5 Emergence and Nonlinearity: Some Geopolitical and Labor Market Influences on Sovereign Wealth Funds (SWFs) 6.6 Constitutions and Sovereign Debt Policy 6.6.1 Systemic Risk and Financial Stability 6.6.2 Constitutionality of the Government’s Borrowing Powers (and Contrary to Public Perception, Government Bonds/Notes/Bills Are Not Securities) 6.6.3 Foreign Aid, Federalism and Constitutions 6.6.4 Sovereign Debt Policies and The Efficiency of Foreign Aid: Accountability and Preemption 6.6.5 Foreign Aid and Sovereign Default Risk: Domestic Capital Markets 6.6.6 The Efficiency of Government and Significant Conflicts of Interest Within and Ineffective Supervision by Federal Government Agencies; and the Existence of “Spatio-temporal Anti-compliance Cartels” in Both Public and Private Sectors 6.7 Federalism, Optimal Voting and Optimal Political Geoboundaries 6.8 Conclusion References Index Economic recessions, environmental damage in several large countries (eg. China, Brazil, U.S., etc.), the Global Financial Crisis of 2007-2015, the COVID-19 Pandemic, cross-border spillovers and the failures of risk-regulation/government-stimulus programs (enacted during 2007-2020) have significantly affected economic systems, financial markets, social networks and environmental compliance worldwide, especially in emerging markets. The foregoing raises significant economic psychology and policy-making questions about the causes and measurement of cross-border spillovers (from developed countries to emerging markets), and evolving relationships among cross-border spillovers, legal/regulatory institutions, foreign aid, political systems, government size, social-welfare, fintech-platforms, asset-market dynamics (volatility, market-depth, liquidity, pension/retirement, remittances, business/consumer confidence; etc.) and sustainable growth. This book is the first of two volumes, re-defines geopolitical risk and addresses these issues in the context of the role of constitutional economics and economic psychology (especially households and companies) as tools for global sustainable growth and risk management. This book can help researchers develop better Artificial Intelligence, Complex Systems and decision-theory models of geopolitical risk, public policy, asset-pricing, global corporate strategy and international capital flows, all of which are increasingly relevant to investment managers, corporate executives, boards-of-directors and government officials. Michael I. C. Nwogugu is an author, serial entrepreneur and consultant who has held senior management, Board of Director and Advisory Board Member positions in companies in the U.S., Europe, Asia and Africa. Mr. Nwogugu wrote the following books: Risk In the Global Real Estate Market (2012); Illegal File-sharing Networks, Digital Goods Pricing And Decision Analysis (2016); Anomalies In Net Present Value, Returns And Polynomials; And Regret Theory In Decision-Making (2017); Indices, Index Funds And ETFs - Exploring HCI, Nonlinear Risk And Homomorphisms (2019); Complex Systems, Multi-Sided Incentives And Risk Perception In Organizations (2019); and Earnings Management, Fintech-Driven Incentives and Sustainable Growth: On Complex Systems, Legal and Mechanism Design Factors (2020). Mr. Nwogugu's research articles have been cited in more than twenty top science journals. Mr. Nwogugu earned degrees from the University of Nigeria (Nigeria); City College Of New York (USA); and Columbia University (New York City, USA).