Foreign Enterprises are capable of becoming potential tenants at a Shopping Citadel. However, as part of the Council State’s stances on Autarky within international trade, Foreign Enterprises are ineligible to become tenants at the Shopping Arenas. Instead, they will be located at the REZs (Real Economic Zones) and at the Shopping Citadels. Most Shopping Citadels are intended to be built in or near the centers of major cities. Such cities are more likely to host populations of Foreigners either visiting, living or working in the country. We can expect some Shopping Citadels to be located within the vicinity of a major city’s REZs as part of the Council State’s RTAs (Real Trade Agreements).
When the Council State consents to the terms of an RTA, it then receives the ability to open Specialty Shops dedicated to selling foreign goods and services as Imports. Transactional sales of goods and services at Specialty Shops are to be bought in the Currency of the State owning those Specialty Shops as SAEs (State-Administrated Enterprises). If the Specialty Shop happens to be owned by the Council State, Foreigners must convert their own Currencies into the Totality’s Sociable Currency in order to purchase them. However, if there is another country operating Specialty Shops and whose Currency is pegged to the Work-Standard, the Totality must convert their Sociable Currency to the Foreigners’ Currency. This is especially guaranteed for most Foreign Enterprises, as it is possible for them to be selling their wares in exchange for their Currencies. Later in this Entry, we will be discussing about circumstances where they could be selling those same wares in the local Currency.
Note that the presence of Foreign Enterprises adds toward the Economic Foreignization (EF) of the VCS Economy and SSE, which is to be registered by the Life-Energy Reserve. We will discuss more about the significance of Economic Foreignization in the Shopping Citadel and the broader implications it bears for the Socialization of Young Minds in a later Entry in Section Five.
How does the Totality Buy Imports?
For the Totality living in their own country, this is also where the Exchange Rates become applicable in their everyday transactions. The Exchange Rate in any RTA does impact the spending habits of the Totality. If Currency Appreciation of the Sociable Currency is superior to the other Currency, it will become easier for the Totality to spend more on Imports. However, if Currency Depreciation reigns, they are less likely to buy Imports. The Totality will be able to convert their Sociable Currency into another Currency at Office IV (“Currency Conversion”) of the Kontor. By doing so, they will be able to purchase Imports.
However, there may be certain moments where the Totality cannot afford Imports or because there is a shortage of any given Currency. The Price for Imports may be too high or Office IV might not have enough of a particular Currency to facilitate further transactional sales. There are also genuine concerns about the Totality allowing their Actual Geld to end up in the coffers of Foreigners insofar as it represents Actual Geld which can never be added to the Life-Energy Reserve. It was an inevitability that I did anticipate as far back as Second Edition of The Work-Standard. My proposal at the time was to offer the “Foreign Exchange Certificate (FEC)” as a suitable countermeasure.
FECs are designed to facilitate any conversions of Actual Geld into “Foreign Geld” (another Currency pegged to the Work-Standard), in addition to any Currencies which are in actuality the Kapital of Socialist nations without Sociable Currencies and the Kapital of true Liberal Capitalist Financial Regimes. In the Central Bank’s FOREX Reserves, the Foreign Geld are separated from the Kapital of those other two sources in its “KDM (Kapital of Dirty Money) Account” and “KBM (Kapital of Blood Money) Account.” With FECs, the Council State can ensure that Actual Geld intended for the Life-Energy Reserve will remain there as part of pursuing the Balances of Trades and Payments. This will deter the Liberal Capitalists from expropriating any Actual Geld for themselves. More importantly, it will also provide newfound Intents for other Socialist countries to make the transition to the Work-Standard once they are ready to do so.
To demonstrate how FECs are applicable to the Central Bank’s FOREX Reserves mathematically, just recall the equation that I used back in The Work-Standard:
FX = FEC1 + FEC2 + FEC3 + FEC4
FEC1 = Domestic FECs pegged to the Work-Standard
FEC2 = Foreign FECs pegged to Work-Standard
FEC3 = Domestic FECs for Currencies from the KDM Account
FEC4 = Foreign FECs for Currencies from the KBM Account
In the subordinate equation for NSFIs in the broader TPP (Total Productive Potential) equation, we can demonstrate how that looks in mathematical terms. It reads as the following:
Office IV = [(FEC1 + FEC2 – SFx) + (KDM – FEC3) + (KBM – FEC4)]
SFx = Service Fees
In FEC1, the Totality convert their Actual Geld, a Sociable Currency, into FECs designed to allow them to purchase Imports. Prices for Imports are higher when purchased with foreign Currencies due to the Exchange Rates and “People’s Surcharges” at Specialty Shops. A People’s Surcharge is designed to allow any purchases of Imports at Specialty Shops will go toward the development of local communities and their denizens, the funding under the authority of local governments.
In FEC2, the Totality are converting Actual Geld into FECs denominated in another Currency. Usually, this applies when the Totality travels abroad and needs to buy goods and services denominated in another Currency pegged to the Work-Standard. In addition to Exchange Rates and the People’s Surcharge, there is a Service Fee charged by the other country’s Kontor.
FEC3 denotes conversions of Actual Geld into the Currencies of Socialist nations that have not been pegged to the Work-Standard, while FEC4 is for Liberal Capitalist Financial Regimes. Although there are no Service Fees or People’s Surcharges, it is important to realize that those FECs are meant to be employed by the Council State to acquire those Currencies for the FOREX Reserves. The number of FECs for those two are not meant to be greater than what they add to the FOREX Reserves. Thus, the Exchange Rate between Kapital and those FECs needs to be slanted in favor of the FECs themselves instead of the Kapital that they are meant to substitute in RTAs.
Let us entertain a hypothetical scenario where the FOREX Reserves for specific Currencies are running low. What happens if neither the Totality nor the State has enough Currencies to spend on any Imports that they might need? What might be the consequences? And how do those consequences register in the Life-Energy Reserve? What might be the countermeasures, just going by information that was covered previously in The Work-Standard (2nd Ed.)?
We must always bear in mind that the Value of an FEC is backed by the Value of whatever Currency it is meant to substitute. Without enough of a particular Currency, the FEC depreciates its Value to reflect that, which is reflected in the Price of converting from Actual Geld. Should the Central Bank run low or run, the Council State might have to either convert some Actual Geld into other Currencies or risk borrowing some from other nations and accruing Sovereign Schuld in the process. Neither is an ideal scenario, but it can happen if the Balances of Trades and Payments were to skew against the Council State in its RTA with other nations. That is why it is absolutely vital that FECs be used by the Totality in purchasing any Imports from Foreigners.
Granted, this is not to suggest that the Totality and the Student Body are incapable of receiving the Currencies of Foreigners. There really is no prohibition on who can receive other Currencies and how much they can have at any given period in Zeit (Time). The real limitations come play when somebody tries to convert their Actual Geld into another Currency directly instead of choosing to rely on FECs, where the Exchange Rate is far more preferable. We can think of a number of ways in which the Totality and Student Body are both capable of generating other Currencies for themselves as well as for the Life-Energy Reserve. And that can be arranged by the various means that are provided as part of the Work-Standard’s specifications.
The most obvious is for personnel to work abroad as part of the RTA. Anyone who works in another country is going to be paid in its issuing Currency. If the RTA includes arrangements for people to conduct Work-Plans, Scholarships, Apprenticeships and Sponsorships abroad, that can be another way. If there are any Enterprises from the official Tournament or the Student Tournament operating in other countries under the RTA, they can receive other Currencies as part of their transactional sales. Thanks to some recent developments in Financial Technology (Fintech), it is possible for somebody to buy goods and services priced in one Currency with a payment card relying on another Currency. Arrangements can be made to allow an Enterprise to receive those payments in their original denominated Currency or in the Sociable Currency.
Moreover, if an Enterprise is large enough to be an Industrial Concern or a Consortium, it is possible for them to establish Subsidiaries in other countries where they are able to easily generate foreign Currencies as part of the LER Process. Since larger, well-established Enterprises are more likely to be owned and operated by the Council State, having a few SAEs, SOEs and even NSEs maintain Subsidiaries in another country can be a great way to generate foreign Currencies through the LER Process. A Subsidiary is capable of achieving this by selling its goods and services denominated in the local Currency and catering to the local population. Back in The Work-Standard (2nd Ed.), I cited the example of McDonald’s Corporation as a suitable case study on how an Enterprise might generate foreign Currencies instead of its own domestic Sociable Currency.
On Specialty Department Stores and DUSCs
In the same “CMEA’s Fixed Exchange Rates and its Hard Currency Shops” Entry from The Work-Standard (2nd Ed.), I talked about the need to revolutionize the concept of the Specialty Shop and the Shopping Mall. Even back then, I was already discussing about the potential for the Shopping Citadel establishing its role as an important addition to the terms of an RTA. One of the proposals that I discussed therein were a number of ideas that were kind of allusions to the “Department Store” and “Shopping Arena” that I have discussed in earlier Entries of The Third Place (1st Ed.).
For those who are not aware, I was brainstorming some ideas about those two entities, even if they were given a particular term and never mentioned again elsewhere. What I am referring to are the “Specialty Department Store” and the “Deep Underground Shopping Center (DUSC).” I never expected to have to use those terms again here but rereading that relevant Entry in the writing of this particular one for The Third Place actually compelled me to discuss about them here.
The manner in which I named those two terms do raise some eyebrows. After all, what makes a “Specialty Department Store” distinct from a regular Specialty Shop? What makes a DUSC different from a conventional Shopping Arena? Is the DUSC in particular similar to the Shopping Center that I had already associated with the first and second Modes of Production?
In addition to the Specialty Shop, the Council State may be inclined to operate a larger variant known as the Specialty Department Store. Designed according to the specifications of a conventional Department Store, the Specialty Department Store is meant to house a greater selection of Imports that the Council State obtained through its RTAs. Just like the Specialty Shop, everything is to be sold in other Currencies or FECs, requiring potential customers to purchase Currencies or FECs in order to buy the foreign goods and services. The items for sale here are meant to be luxury goods that cannot be found elsewhere in the VCS Economy or the SSE.
Those same items, because they are luxury goods, are meant to be sold at higher Prices, and they are so exclusive that they cannot otherwise be found at any Foreign Enterprises. Due to those Prices, it becomes necessary for customers to rely on FECs as their primary means of purchase, which would require them to convert any foreign Currencies they have into FECs. Buying luxury goods at a Special Department Store is meant to be cheaper when done with FECs as opposed to using foreign Currencies. Since the Council State remains as the final authority in negotiations of RTAs, it is able to ensure that Foreign Enterprises do not sell the same goods and services offered at the Specialty Department Stores. That in turn will also allow it to provide another source of foreign Currencies for the Central Bank’s FOREX Reserves.
Ideally, the location of a Specialty Department Store should be at a Shopping Arena, where local communities are less likely to encounter visiting Foreigners and Foreign Enterprises. Their higher People’s Surcharges will also help those communities as well. This leaves the Specialty Shops to serve as tenants at Shopping Citadels, allowing them to concentrate their efforts on selling any Imports to locals and tourists alike for other Currencies or the corresponding FECs.
As for the DUSC, I must confess that it was not a suitable name to properly convey its broader applications in international trade. In its original context, a DUSC was meant to be a type of Shopping Arena established within the vicinity of major transportation hubs like important railway stations, airports, seaports, and highways. Gas stations, hotels, restaurants, convenience stores, and other key amenities would be provided at those areas. Depending on how important the transportation hub happens to be, it is possible that it might become as vibrant as a Shopping Citadel. They goods and services provided there are meant for travelers who need somewhere to rest, eat, or buy souvenirs on their return trip.
And looking back at the term itself in hindsight, I am convinced that DUSC simply does not convey the true nature of its intended applications. On its own, the term implies that it exists in the subway stations of major cities, perhaps even connecting them to the Shopping Citadels themselves. While it is possible for that to be the case, I feel that it would be best that a different take its place. If I had to propose a different term, it would have to be the “SATH (Shopping Arena Transit Hub).” The original term, as it was used in The Work-Standard (2nd Ed.) will remain as it is.
Categories: Third Place
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